U.S. consumers have 37 percent more credit card and other revolving debt than they did 10 years ago, The Wall Street Journal reports, citing Federal Reserve data.
Granted, that’s 6 percent less than the consumer debt peak of $2.6 trillion hit in September 2008. However, most of the debt decline had occurred by September 2009. Over the past year, consumers' credit has been essentially flat at around $2.4 trillion.
The news is especially grim when it comes to mortgage debt: Almost 23 percent of mortgages are underwater, according to data compiled by JPMorgan Chase.
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There is also more mortgage debt outstanding than there was five years ago, roughly $9.9 trillion, according to the Fed. The result is consumers find it harder to tap home-equity credit lines or sell their houses.
The Fed is about to end QE2, the quantitative easing it put into effect to aid the U.S. economy, which didn’t do much to reduce the heavy debt burden carried by both government and individuals, and the U.S. budget deficit is worsening.
However, consulting firm Deloitte expects U.S. retailers will return to modest growth in time for the holiday season, putting them in better financial shape their European counterparts, which will likely suffer the effects of a debt crisis for years to come.
“I would expect to see a very difficult environment for retailers in Europe over the next one to two years. And even beyond that I'm not sure we're going to see a whole lot of health," Ira Kalish, director of economics and consumer business at Deloitte, told Reuters.
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