Better in the red than dead

[Robert Manning]

The sluggish growth in consumer spending and household debt levels is at least partially due to the reticence of banks to increase credit lines to heavily indebted households as well as their reluctance to reduce finance rates.  Also, keep in mind that traditional indicators of consumer debt do not adequately reflect current household finance strategies as leases, rent-to-own contracts, pawn loans, and "payday" loans are not included in these consumer debt statistics.  Not incidentally, the latter are soaring. 

Banks reluctance to lend rather than consumers' need to spend is more likely to exacerbate the impending recession

r.manning

>>With borrowing rates at their lowest since the early 1960s,

>>households

>>are taking a relaxed view about their debt burden.

>

>this contrasts with the US [still the spider at the center of the

>world-wide economic web], in which consumer spending recently rose

>much

>less than did personal income. After a period of what might have

>been

>"necessitous borrowing" (to use Bob Pollin's phrase), it might be

>that US

>consumers are moving toward actually saving, encouraging a deepening

>recession.

>

>Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~JDevine

>

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