Consumers' Overdue Debts Put Extra Weight on Economy

Wednesday, 13 Aug 2014 08:38 PM

By Dan Weil

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
The conventional wisdom is that the American consumer has deleveraged since the 2008-09 financial crisis.

But a new study from the Urban Institute shows that 5 percent of American adults on file with credit reporting agencies have at least one debt that is between one and six months overdue, The Fiscal Times reports.

And more than one-third have seen a debt sent to a collection agency within the past seven years.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

"They are stunning numbers," declares Caroline Ratcliffe, author of the study and a senior fellow at the institute,. "Debt in collections is pervasive, and it threads through nearly all communities."

That may be one reason why the economy has been sluggish since the recession ended, expanding at only a 2.2 percent pace, notes Fiscal Times reporter Rob Garver. Bad debts limit consumer borrowing, which in turn limits economic growth.

"The important part of it is that this debt can harm people’s credit scores," Ratcliffe said. "To the extent that it impacts people’s access to well-priced credit it can affect whether they will be able to buy a home or get that loan to start a business.”

MarketWatch columnist Rex Nutting also is worried about consumer debt.

"Recent data show that the middle class is once again borrowing, mostly for autos and education. Although the cost of servicing their debts has fallen to a record low thanks to low interest rates, middle-class families are vulnerable if interest rates rise significantly," he writes.

"And that means the economy is vulnerable."

Consumer credit outstanding rose to $3.2 trillion in May from $2.6 trillion in 2009.

Editor’s Note: Retire 10 Years Earlier With These 4 Stocks

Related Articles:

© 2014 Moneynews. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Calpers to Exit Hedge Funds, Citing Expenses, Complexity

Monday, 15 Sep 2014 18:35 PM

The California Public Employees' Retirement System plans to divest the entire $4 billion that it has with hedge funds, s . . .

Safety Chief Blasts GM's 'Incredibly Poor Decisions'

Monday, 15 Sep 2014 18:48 PM

The top U.S. auto safety regulator harshly criticized General Motors Co for not promptly reporting and recalling cars no . . .

Alibaba Boosts IPO as Demand Strengthens

Monday, 15 Sep 2014 17:21 PM

Alibaba Group Holding Ltdraised the price range on its initial public offering to $66 to $68 a share, responding to stro . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved