Reuters —
NEW YORK (Jilian Mincer and Jonathan Spicer) - More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.
In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.
Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.Read the rest at The Huffington Post
Americans Raid Savings To Get Through Stop-Start Recovery
3 comments:
Why its almost like when the govt spends less the private sector has less to spend! Clearly what America needs is a balanced budget amendment.
/snark
Oh here's the most clueless part of the piece...
American households "have been spending recently in a way that did not seem in line with income growth. So somehow they've been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.
"If they saw future income and employment increasing strongly then that would be reasonable. But I don't see that. So I've been puzzled by this," he said.
"'If they saw future income and employment increasing strongly then that would be reasonable. But I don't see that. So I've been puzzled by this,' he said."
Some of these people are so befuddled by expectations theory it is embarrassing.
If you look at Fed Bank Credit:
http://federalreserve.gov/releases/h8/current/default.htm
Total Loans and Leases since end of June 2011 is up about 200B
This consists of C&I loans 85B and the rest falls under "other".
Credit card and Real Estate is flat.
This 200B rise in 6 months is pretty substantial and rivals the increase in bank credit that was exhibited back in the go-go years 2006, 2007.... so bank credit is expanding at a pretty good clip as of the last 6 months...
I dont think it is houses and autos or consumerism. That is NOT what the data says at first look any way...
What is it?????
Hunch: (Hunch only) State Budget (Revenue) shortfalls are leading to this expansion of credit either by direct bank lending, or states have put vendors on "slow pay" and the vendors are taking their invoices "to the bank"....
Resp,
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