The last recession that our country experienced was, in truth, a mild one. The stock market and many corporate profits began to tank, but consumer spending seemed to dance merrily on through the recession without as much as a scratch. Consumer spending has long been the major engine driving the entire United States economy, which is why it is so vital that this facet of the economy be untouched even by the roughest recessive activity.
In recent decades, recessions have been like this, Bearish analysts as well as strategists have been grossly underestimating the voracious spending habits of the United States consumer, as well as their overall resilience. This has gone on for at least the past fifty years or so.
Unfortunately, this time it is different. These are considered to be the five most expensive words in the entire English language simply because of what they are indicating. This recession is going to be a doozy, there is absolutely no doubt about it at this point as people begin to see that not only is it showing the earmarks of a regular recession, but it is also shaking up consuming spending in ways that our government and economy have not seen in numerous decades.
Why is this recession going to be so much worse than every other before it?
To be blunt, it is because the United States consumer is finally completely broke. For the past thirty years or so we have been piling on our debt, and spending nearly every single penny that we have earned. This insane borrowing spree has been made possibly by utilizing a virtual smorgasbord of 0% interest and 0% down lending products with ever appreciating asset prices.
Unfortunately, this situation is now changing at an extremely rapid pace. The lenders who once put these products together have now been completely torn down and demolished. Asset prices are falling at quicker paces than we knew existed. Where is this leaving us? Unfortunately this is leaving American consumers with absolutely no choice than to cut back severely.
For example, United States debt has risen significantly from 163% of GDP as of 1980 to a startling 346% in 2007.
Household debt, which is a subset of United States debt, has risen to 100% in 2007 from 50% of GDP in 1980.
Looking at these numbers should give you an excellent indication of where our level of debt is going. The credit crisis is forcing consumers and the government alike to take a long, hard look at our current financial health and what needs to be done to fix it. This exponential rise in United States debt and consumer and household debt is proof that we are not doing what is required to handle our money in a healthy and advantageous way. Above all else, if things do not begin to change now, this mounting debt will only continue to grow, until every last consumer in the United States is completely broke, even that top 1% that holds most of the wealth in the country. If banking and lending institutions are going bankrupt, and car manufacturers are seeking assistance from the government, then things really are slipping to the point of no return at a pace that no one seemed to anticipate.
Photo Credit: 1
Originally posted 2008-10-30 05:40:21. Republished by Blog Post Promoter
Related Posts -
Bush Plans to Host World Summit to Address the Current Credit Crisis The United States President George Bush recently announced his intention to hold a world summit involving leaders from all around the world in order to discuss the global financial crisis in the near future. What he did say however is that any financial reform should absolutely not come at the...... -
Welcome to the Carnival of Credit Report Stories Welcome to the November 10, 2008 edition of credit report stories! Rich Credit Debt Loan is happy to host the latest edition of the Credit Report Stories carnival. We hope you enjoy the posts and find many worthwhile articles. Below are our editorial picks: Credit Karma presents Balance Needed As...... -
Pay Debts in the Current Economic Climate In the third quarter of the year 2008, it was noted in figures that the occurrence of personal or individual insolvencies had increased by 8.8 percent in comparison to the previous quarter. Additionally, the numbers in these figures for 2008 proved to be 4.6 higher than the third quarter from...... -
Debt Decisions If you are thinking about putting into practice debt leveraging in order to start creating more than one stream of income, it can seem like there are thousands of avenues open to you. For those just starting out, this can be very confusing and it is all too easy to...... -
Consumers Need to Exercise Caution as Credit Card Rates Climb Many consumers are finding that even though they have had the same credit card for years, and have paid the balances off completely every month, their monthly statements are suddenly appearing with a surprise: An interest rate hike by as much as three percentage points. Some consumers are not worried......
Related Websites -
Get to Know the American Collectible Gold Coins Gold has always been a highly valuable commodity. It caused a rush in the west when it was discovered and has been valuable throughout time. This is why so many civilizations used it to create their currency. The gold coins which were created have been used throughout time either because...... -
Enjoying a World Coin Collection Most people who begin to collect coins actually do so by collecting regional coins from their own mother country. So for example, if you are from the United States, then you may want to collect United States coins first and foremost. This is because you are already familiar with the...... -
How to Compare Hybrid Cars It is hard to find a comparative ranking for hybrid cars, so how do you compare hybrid cars if you have trouble getting the information that you need? Luckily there are not that many types of hybrid vehicles on the market today, so when you decide to compare hybrid cars...... -
United States Stamps Stamps -> Books and Manuscripts -> Back of Book United States stamps are fun to collect and you will have many different varieties from which to choose. If you are looking for a hobby for your kids, or you are just interested in US history, these stamps are a great...... -
United States Eliminated from Davis Cup In the first round of the long-anticipated Davis Cup tournament, the US is already out of the running marking the first US first round elimination since 2005. The American team was going after their 33rd Davis Cup victory, but Serbian Novak Djokovic didn't allow it to happen. With the......
- Booklets Back of Book United States Stamps
- United Nations Worldwide Stamps
- United States Countries Flags Historical Memorabilia Collectibles
- Elizabeth Arden Anti-Aging Products Skin Care Store
- Freeze 24/7 Anti-Aging Products Skin Care Store
Categories:
bad debt, Banking, Bankruptcy, credit, Debt, economy, Personal Finance, stock market
Tags:
1 comment so far ↓
On top of what you’ve said rising energy and food costs are making the situation even worse. They are putting more strain on an already highly stressed consumer. What will happen to credit interest rates when the fed has to raise interest rates to combat inflation?
Leave a Comment