Thursday, December 11, 2008

Good news for less debt?

The government announced today that American's household debt fell for the first time ever during the third quarter. Unfortunately, net worth also fell due to declining home and stock prices. Good news? It doesn't seem so. A big part of the reduction in debt is apparently the foreclosed homes which are moved out of the debt numbers. So, we have less debt because less people now own their homes. And, then there's that darn credit crunch keeping lending rates for consumers higher which in turn keeps them from spending. Others may not even be able to obtain loans for common consumer purchases like cars.

I like the idea of less debt in general. In this case, though, it is not a good sign for the economy.


No comments: