10 years after Lehman, is another crisis preparing?

Ten years ago, the collapse of Lehman Brothers indicated that the United States was heading for a financial crisis. In the years that followed, consumers struggled to manage their debt as the economy contracted, unemployment accelerated and incomes stagnated. The Federal Reserve has adopted an extraordinary monetary policy to curb the decline, lowering interest rates to a level close to zero to ease the debt burden and buy securities to support credit markets.

These actions, along with Treasury Department initiatives, helped borrowers and lenders overcome the Great Recession. The Treasury, along with other regulators, has created programs to help borrowers repay their mortgage debt, including homeowners who were "under the water," because of their mortgage over the value of their house. Congress has developed stricter capital rules to consolidate banks.

So where are we 10 years later?

• Consumer debt has reached levels higher than before the crisis. This is offset by an increase in personal incomes, although these gains were small by historical standards.
• US consumers have a lower debt ratio. Americans have improved their financial situation as debt levels have fallen to 80 percent of GDP from a peak of 99 percent at the start of the crisis in 2008.
• Delinquency rates are down. Of 10% of mortgages in 2010, only 4.36% of mortgages are overdue. Credit card arrears went from 6.77% in 2009 to 2.47%. The only concern is unpaid high-risk auto loans, which are now higher than before the crisis.
• The debt service ratio is down. Borrowers' share of debt service is now 10.21%, down from 13.22% in 2007. However, this is up from the 9.89% low recorded in 2012.

Consumers are ready to improve, or at least maintain, their favorable financial situation as a result of the recently adopted Tax and Employment Reduction Act. Although most benefits will go to the highest income groups, overall consumer finances should improve.

However, these tax breaks have a cost: a deterioration in the US government's fiscal position. The long-term budget estimates of the Congressional Budget Office, released in June 2018, reveal an unprecedented accumulation of federal debt.

• Way to 100,000 trillion dollars: In the new baseline scenario incorporating recent legislative changes, the national debt reaches $ 99 trillion in 2048, the equivalent of 152% of GDP.
• Deficits of billions of dollars: The federal budget deficit is expected to exceed $ 1 trillion in 2020 and never decline again, reaching $ 2 trillion in 2032 and $ 6 trillion in 2048.

These projections indicate that federal budgets will be under significant pressure. These forecasts are based on the assumption of a maintenance of favorable interest rates, and in particular, no recession was modeled during the projection period. Unfavorable real-world events could lead to lower fiscal outcomes.

This creates risks, not just for the government: consumers may also face financial problems.

Consumers are likely to be hit by higher taxes in the future as the government faces fiscal responsibilities and seeks more revenue. In addition, under the new tax law, the sunset periods planned for 2026 mainly affect taxpayers and not corporations. And higher deficits and higher federal debt levels could lead to higher public debt rates, which would increase the rates consumers pay on their loans.

Both of these risks would reduce consumers' ability to manage their debts.

Ten years after the collapse of Lehman Brothers, consumers are better able to repay their debt. And while the current policy suggests a short-term improvement, it has a price: an increase in the risk that the federal debt may precipitate a new crisis.

Tendayi Kapfidze is the chief economist of LendingTree. He oversees the analysis of online loan exchange on the US economy by focusing on real estate and mortgage market trends.