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by Brian Riley July 31, 2018 12:19 pm 0
Interesting article in the American Banker that suggests that Americans have not learned a lesson from the recession of 2008.
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But 10 years later, what is remarkable is the financial crisis. We continue to borrow more and save much less than prudence dictates.
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Household debt, which declined between 2008 and 2013, rebounded sharply.
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In the first quarter of 2018, it was at a record level The composition of our debt has changed, and we have been better able to manage our obligations, thanks in large part to an extended period of low interest rates. East. But the crisis did not teach us a lesson on the dangers of borrowing too much.
Remember the recession? One in ten credit cards has become a bad debt. Unemployment rose to 9.5% and peaked at 10% in October 2009. After the financial crisis, some observers have argued that Americans are entering a new era of frugality, in which lenders could not rely on [19659007] For a time, Americans seemed to change their money habits.
A survey conducted by the Consumer Federation of America in February 2009 found that 44% of consumers were making an effort to pay down their debt, compared with 38% the year before.
It's not just credit cards. Auto loans and student loans each represent more debt than plastics.
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But the rapid growth of auto loans was probably more attributable to an increase in the supply available – lenders took note of the high percentage of vehicle owners on time during the crisis and then loosened their standards – that it was to changes in the transport demand.
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The big question is what will happen to consumer debt levels as the Fed continues to raise interest rates. In an optimistic scenario, Americans who have been unable to earn a decent income on their savings over the last decade will start cashing out more of their earnings.
A prescription from a credit manager … Make your life easier. one in ten dollars spent. Be strategic in your expenses and try to use a credit card like a debit card, by not turning. Never go beyond the discretionary spending of restaurants and grocery stores. Never pay just the minimum amount.
Save as the economy is working well. Go on as if the recession were still in progress
Overview of Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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