Consumer debt spiked in April

June 10, 2014

Consumer debt is back in the US. Matt Phillips at Quartz reports that after a long period of low or negative debt since the crisis, households seem to be breaking out their credit cards again. In April, revolving consumer debt spiked above $5 billion for the first time since 2008:



Phillips explains why that’s a bad thing:

So is an increase consumer credit use good news or bad news? Well, if you’re simply rooting for GDP growth, without regard for how it occurs, you can argue that this is a great sign. Roughly 70% of US economic activity is driven by consumption … But if you care about the long-term sustainability of US economic growth and the financial health of American households, it’s not particularly heartening to see signs of backsliding into a widespread reliance on credit cards.

There’s more on this phenomenon at Quartz.

One comment

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Or maybe its because everything we buy is more expensive, as reflected in the CPI this month. Maybe its because we get mixed signals from the media which say things are getting better so we should spend and help the engine, when in reality things are falling and your methods of fluffing the situation are really going to push it farther down and faster than it would have if you had just reported the truth about things. If you would just ask yourselves one question: How can the stock market be rising when all of the fundamentals say it should be falling dramatically? Investigate that. Report the truth. Have a backbone for once.

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