Americans Taking On Record Debt
Bloomberg News
After deleveraging in the aftermath of the last U.S. recession, Americans have once again taken on record debt loads that risk holding back the world’s largest economy.
Household debt outstanding — everything from mortgages to credit cards to car loans — reached $12.7 trillion in the first quarter, surpassing the previous peak in 2008 before the effects of the housing market collapse took its toll, Federal Reserve Bank of New York data show. To put the borrowing in perspective, it’s more than the size of China’s economy, or almost four times that of Germany’s.
People are borrowing more not necessarily because they’re confident about their financial prospects. They’re doing it for necessities like education or transportation and, in many cases, just to get by.
On the surface, liabilities at an all-time high aren’t alarming when the assets side of ledger is taken into account. Household net worth stands at a record $94.8 trillion, thanks to rebounding home values and soaring stock portfolios. But that increase has primarily benefited the nation’s wealthiest, said Lance Roberts, chief investment strategist at Clarity Financial LLC in Houston and editor of the Real Investment Advice newsletter.
“When you look at net worth, it’s heavily skewed by the top 10 percent,” Roberts said. “The average family of four is living paycheck to paycheck.”
For most Americans, whose median household income, adjusted for inflation, is lower than it was at its peak in 1999, borrowing has been the answer to maintaining their standard of living.
The increase in debt helps explain why the economy’s main source of fuel is providing less of boost than in the past. Personal spending growth has averaged 2.4 percent since the recession ended in 2009, less than the 3 percent of the previous expansion and 4.3 percent from 1982-90.
Principal Financial Group Inc. Files SEC Form 4, Statement of Changes in Beneficial Ownership of Securities: (Jul. 31, 2017)
Catasys Announces Program Expansion with Leading National Health Insurance Plan to Include Anxiety Disorder
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News