There's a scary little statistic buried beneath the US economy's apparent stability: Consumer debt levels are now well above those seen before the Great Recession.
As of June, US households were more than half a trillion dollars deeper in debt than they were a year earlier, according to the latest figures from the Federal Reserve. Total household debt now totals $12.84 trillion — also, incidentally, around two-thirds of gross domestic product (GDP).
Here’s the thing: Unlike government debt, which can be rolled over continuously, consumer loans actually need to be paid back. And despite low official interest rates from the Federal Reserve, those often do not trickle down to many financial products like credit cards and small business loans.
Michael Lebowitz, co-founder of market analysis firm 720 Global, says the US economy is already dangerously close to the edge.
"Most consumers, especially those in the bottom 80%, are tapped out," he told Business Insider. "They have borrowed about as much as they can. Servicing this debt will act like a wet towel on economic growth for years to come. Until wages can grow faster than our true costs of inflation, this problem will only worsen." he said.
Source: Business insider
Trader Bozhidar Arabadzhiev
Original post: Americans have more debt than ever — and it's creating an economic trap
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