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Kimberly Amadeo

Falling Debt Means Lower Consumer Confidence

By June 10, 2011

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After rising 2.9% in March, credit card debt dropped 1.4% in April. This was another indication that shoppers are losing confidence again in the economic recovery. This is a resumption of the longest decline in credit card use since the Federal Reserve began keeping records in 1943. (Source: Federal Reserve, G.19 Release, June 7, 2011)

At this point in the recovery, this is a another bit of unwelcome bad news. Why? Credit card debt boosts personal consumption, which drives 70% of the economy. A decline would have been better if it had occurred during the 2005 bubble, when the economy needed to have the brakes put on.

Even with the drop, Americans have a huge credit card debt load. In April, it was $790 billion, or $6,639 per household. Note: This estimate is based on 119 million households or 308.7 million / 2.59 persons per household. (Source: U.S. Census, 2010 Data; Average Household Size)

On the other hand, Americans continued taking out loans for auto, furniture and consumer electronics. This non-revolving debt rose 5.3%, to $1.63 trillion, in April. This translates to an additional $13,697 of debt per household. It's been increasing since early 2009 thanks, in large part, to an increase in government education loans.

What It Means to You

The best way to improve your earning ability is with a college degree. Research shows that the unemployment rate for college graduates is only 4.2%.  If  there is any way you can go tocollege, take advantage of government programs now. They could soon be a victim of Congressional budget cutting.

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Comments

June 12, 2011 at 12:01 pm
(1) Mike says:

I discovered a petition “America’s Voice” that is trying to gain awareness to regain control of America’s lost industries and economic revenues sources. It seems like a pretty noble cause. It also seems as though they have a good understanding of those countries that are really undermining America’s well being.

June 14, 2011 at 7:56 pm
(2) Paul says:

Everyone is concerned about jobs being outsourced. I keep reading that we need a better educated workforce in order to bring these manufacturing jobs back to the US.

I don’t think it takes a MBA to work in a manufacturing environment.

the people that these jobs are being outsourced to are not highly educated. They just work for less than the US workers therefore, reducing the overall cost of manufacturing.

The only way to bring jobs back to the US is through import tarifs.

June 15, 2011 at 2:31 pm
(3) Kimberly says:

The other thing that is bringing jobs back is the falling dollar and rising cost of gas. Companies are finding it is now becoming cheaper to manufacture in the U.S. in many cases.

For more, see Jobs Outsourcing.

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