Is Debt Producing a Lost Decade?
Jennifer WhearyCNN Money reported today that the US may be entering a "lost decade" characterized by lack of economic growth and high household debt:
Many experts say private debt owed by households, as well as businesses, is an even bigger problem than the government debt that's getting so much attention lately. And it won't be solved without a difficult stretch of high unemployment and slow growth that will likely last for six or seven more years, producing America's own version of Japan's "Lost Decade."
The problem of household debt and average American families losing ground is not news to Demos. We have written about such topics as why some working families wrack up rampant credit card debt and other don't, how credit has become a "Plastic Safety Net" households use to stay afloat in tough times, and the economic impact of medical debt.
Americans use credit cards millions of times every day. The convenience and utility of revolving credit has become a way of life for most families. However for some, it has also become a lifeline.
Families turn to credit cards to meet basic expenses when an unforeseen crisis hits — such as a job loss or medical emergency. The additional credit card debt these families take on further inhibits their ability to save. An ongoing lack of savings makes them more likely to have to resort to credit cards — and perhaps more desperate measures — when future crises arise. The end result is an ongoing cycle of economic vulnerability.
Families continue to deal with the consequences of their debt. They are also facing the reality of wages that have barely increased since the late 1970s, and are stagnated at best in recent years due to lack of jobs.
So losing ground is nothing new to the average American family. What would be news is a concerted policy effort to help families not only catch up, but move forward.
Reader Comments (1)
It sure is. I've been carrying around a perpetual 30 grand in debt since college, and that's just on the credit cards I used to cover what financial aid didn't. But what do you think about proposals like this: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/06/09/investopedia52661.DTL
I mean, it's all well and good to go to school near home, if there is one, but the costs of in-state school are shooting through the roof too.