American Consumers Carrying Record Debt
Consumer debt reached a new high in July, borrowing by increased by $19.1-B in July to reach a total of $3.45-T, according to the latest monthly report from the US Fed, which was released last week.
The increase came from auto and student loans +$14.8, and consumer credit card debt +$4.3-B. The Fed’s credit reports do not include loans (debts) that are secured with real estate, such as mortgages and home equity loans.
Debt is overall bad news for personal finances, but economists say it reflects good news about the economy because increased borrowing and consumer spending accounts for nearly 70% of economic activity
During Q-1 of this year, the economy grew by only 0.6%. During Q-2 it grew by 3.7%, and economists believe growth will average about 3% in Q’s 3 and 4 of Y 2015.
As reported last week, 173,000 jobs were added in August and 245,000 jobs were added in July, according to the latest unemployment report from the US Bureau of Labor Statistics. That brought the jobless rate down to 5.1%, that because hundreds of thousands have stopped looking for work. Wages for US workers are stagnant.
This analyst sees the US economy headed into recession by early Y 2016, things are not good in the US economy no matter the headline quips.
Have a terrific week.
Paul Ebeling
HeffX-LTN
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