Unstructured Finance

By Matthew Goldstein

Bad data continues to confound the U.S. government in its measurement of the economy, with the Federal Reserve Bank of New York noting it too has been a victim.

In the Fed’s most recent report on outstanding consumer debt, the nation’s central bank said it recently discovered it had been underestimating the total dollar amount of student loan debt for a number of years. In the report, the NY Fed said some of the under-counting may have stemmed from the methodology used by one of its vendors.

The Fed said it has fixed the problem, which was a significant one. The Fed says it may have been under-estimating outstanding student loan debt by some $290 billion.

But don’t worry, the Fed indicates there’s nothing wrong with its other data collection. And on that front, the Fed said overall consumer debt at the end of the third-quarter declined by $60 billion to $11.66 trillion.

Let’s hope the Fed hasn’t been under-counting outstanding home loans and credit card debt either.

Early morning at Occupy Wall Street

Updated Oct. 5

By Matthew Goldstein and Jennifer Ablan

There’s been a lot of talk that other than rallying against bankers and corporate greed, the message coming from Occupy Wall Street isn’t a clear one. And many of the college students, artists, unemployed, transients who’ve set-up camp in a concrete plaza in  lower Manhattan wouldn’t disagree with that assessment.

In fact, many of the young protesters–mostly in their 20s–seem to embrace the notion that it’s hard to define just what Occupy Wall Street is all about and what it hopes to achieve. For many, sleeping on the streets and staging a “Zombie March,” or getting arrested for blocking traffic on the Brooklyn Bridge is enough to bring attention to the fact that too many Americans are still suffering from the financial crisis.

“I’m here because in this recession, the rich have become richer — and it ties in to the bank bailouts,” says Dylan Bozlee, a college student from Hilo, Hawaii, who booked a one-way ticket to New York to join the protest. “Think about it? Wall Street got us into this huge mess, enabled by our government, and we are in the same state of affairs–recession.”

By Matthew Goldstein

For months now we’ve been hearing a lot about the $14 trillion in debt owed by the U.S. government. But there’s been far too little talk about the almost equally high debt tab owed by U.S. consumers.

The Federal Reserve recently reported that total outstanding debt owed by U.S. consumers was $11.4 trillion, down from its third-quarter 2008 peak of $12.5 trillion. At that pace, it could take years for U.S. consumers to delever, or in plain English–reduce the debts they owe on their homes, credit cards, autos and student loans. But when it comes to the staggering sum of consumer debt in this country, it’s pretty clear that time is not on our side.

In fact, the longer it takes for consumers to pay-down their debts, it simply means demand for homes, autos and other big ticket goods will remain lax. And that means the unemployment rate won’t get much lower than its current 9 percent rate anytime soon. In fact, with all the signs pointing to a double-dip recession, unemployment could very well inch higher in the next few months.