Post by unlawflcombatnt on Aug 11, 2006 1:48:15 GMT -6
An interesting article by Jessica Bennett from MSNBC, in an interview with economist Christian E. Weller, states that household debt is now 126% of Disposable Personal Income. Consumer debt, not including home mortgages, is now $2.17 Trillion dollars. In 2005, consumers cashed out $431 billion in home equity. To put this in perspective, U.S. GDP was $12.4 trillion in 2005. According to the U.S. Bureau of Economic Analysis, GDP growth for 2005 was 3.2%, or about $397 billion. The growth in Personal Outlays was $563 billion. Disposable Personal Income increased by only $355 billion. Thus American consumers spent $208 billion more than they earned in 2005. Much of this additional $208 billion was financed through home equity extraction. Below is a link to a graphic taken from the U.S. Bureau of Economic Analysis GDP report. Note the change between the 2004 and 2005 Disposable Personal Incomes, and the change between 2004 and 2005 Personal Outlays (underlined in red.)
The direct link to the BEA site for this information is at: www.bea.gov/bea/newsrelarchive/2006/gdp206a.pdf
As stated elsewhere, this debt bubble is a ticking time bomb. Eventually consumers will be unable to borrow enough money to increase consumer spending, to make up for declining real wages. There is considerable evidence that this point has already been reached. Durable purchases by consumers have increased 0% since January, following less than a 2% increase in 2005. Many consider this the opening salvo of an upcoming recession. Time will tell.
The direct link to the BEA site for this information is at: www.bea.gov/bea/newsrelarchive/2006/gdp206a.pdf
As stated elsewhere, this debt bubble is a ticking time bomb. Eventually consumers will be unable to borrow enough money to increase consumer spending, to make up for declining real wages. There is considerable evidence that this point has already been reached. Durable purchases by consumers have increased 0% since January, following less than a 2% increase in 2005. Many consider this the opening salvo of an upcoming recession. Time will tell.