Confirms my views over the last 1-2 years, the slow recovery is due to lack of consumer spending (which drives 70% of the economy), which, in turn, is due to: 1) flat wages; and 2) cut back on consumer borrowing. Consumer debt fueled the last boom - nothing else. The American Bankers Association says card debt as a share of peoples income has reached its lowest level in more than a decade. People increasingly pay off balances each month. And just 2.44 percent of card accounts are delinquent, compared with the 15-year average of 3.82 percent. Researchers at the Cleveland Fed found that after adjusting for inflation, debt from mortgage and auto loans remains below pre-recession levels. Applications for credit by deep subprime borrowers — those most at risk of defaulting — have dropped 36 percent from pre-recession highs. Because people are taking on less debt, theyre also spending less. That phenomenon has slowed growth because consumers fuel most of the U.S. economy. Consumer spending has risen just 10.8 percent during the five-year recovery — the smallest increase among expansions in the last 55 years, said Carl Tannenbaum, chief economist at Northern Trust. abcnews.go/Business/wireStory/us-economy-sluggish-now-sturdier-24682177?singlePage=true
Posted on: Thu, 24 Jul 2014 14:53:47 +0000
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