Debtor Nation
By George Anderson
In public remarks, the chairman of the Federal Reserve, Alan Greenspan, hasn’t voiced deep concerns about the debt burden taken on by American consumers.
The same may not be said of the legion of consumers who find themselves trying to pay off credit cards and make the monthly mortgage payment. According to the Federal Reserve, U.S. households owed $9.7 trillion on their credit cards and homes at the end of June.
A report in the Washington Post said that the debt owed is “more than 80 percent of the nation’s gross domestic product through the end of the second quarter and more than 100 percent of total disposable household income of about $8.6 trillion. It is also about 21 times the burden shouldered by U.S. households in 1970.”
Sung Won Sohn, chief economist at Wells Fargo, acknowledges the debt level is a concern, but most of it, 70 percent, is tied up in mortgages allowing consumers to build up assets, as well. As long as the real estate market stays hot, consumers should be okay.
Moderator’s Comments: Is consumer debt having an impact on current retail sales? Will it further impact retailing
in the years ahead?
There is concern from some that paying down debt will leave Americans with too little when they reach retirement age.
This too from the Washington Post article: Personal bankruptcies are running at record highs and the personal savings rate is below 1 percent and
very close to a record low. –
George Anderson – Moderator