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Yachtie -> one way or the other (10/27/2012 5:24:22 AM)
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It's a fork in the road. Choose wisely.
WASHINGTON — For the first time since the Great Recession hit, American households are taking on more debt than they are shedding, an epochal shift that might augur a more resilient recovery.
For two of the last three quarters, American households’ total outstanding borrowing on things like credit cards, mortgages and auto loans has increased after falling for 14 consecutive quarters before then. Some economists even see an end to the long, hard process of deleveraging — as they refer to the cutting of debt relative to income or the nation’s economic output. That process, they say, has been a central reason for the extraordinary sluggishness of the recovery.
“We’re not getting a tail wind. We’re losing a head wind,” said Mark Zandi, chief economist at Moody’s Analytics, who said of the deleveraging process for households and businesses, “It’s basically over.”
Given the importance of consumer spending to the American economy, those changes might translate into a more resilient economy, analysts said.
SNAP (food stamps) is at an all time high. Unemployment is still high, and well over 10% if one considers sources other than mainstream. Job creation is more the part time than full time. Student debt is still rising. The last print of GDP saw an increase due mostly to government spending.
The question is, are people taking on more debt because things are actually getting better? Or perhaps are people taking on more debt because they have no choice, gotta eat. Any cessation of consumer deleveraging bodes one of two things -
We've either turned the corner or we're seeing the calm before the storm.
Choose wisely.
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