Though American consumers currently owe less on credit cards and home mortgages, economists are still predicting tough times are coming for both the national and international economies.
Americans seem to have less debt, according to Moody's Analytics, which calculates the current debt load carried by families has dropped to 2006 levels - one year before the nation spiraled into what is being dubbed the biggest economic recession since the Great Depression.
According to the calculations by Moody's Analytics, the debt load of American consumers - ranging from credit cards to mortgages - is on par with the levels reported back in 2006 and earlier. The only exception, according to the Los Angeles Times, is the nation's student loan debt, which has soared in recent years and likely will continue to do so.
The Times, explaining what the debt decrease means for American consumers, reports:
[H]ouseholds today are paying less than 16% of after-tax income to cover debt payments and lease obligations, the smallest share since 1984, Federal Reserve data show.
With less debt weighing them down, consumers are feeling more upbeat today than they have in five years, according to the Thomson Reuters/University of Michigan survey of consumers this month. And that could translate into a little more spending and risk-tasking.
Yet, the Times report also points out that the debt drop for American families does not necessarily mean we have cleared all the hurdles of the recession, noting:
This month, the International Monetary Fund issued its most pessimistic forecast for global growth since 2009, warning that risks of a serious slowdown are "alarmingly high." Concerns include weaker growth in China and other major developing economies, as well as ongoing recessions in the Eurozone.
In the U.S., job growth has been mediocre, and workers' inflation-adjusted earnings stagnant. And many businesses and individuals are bracing for at least some tax hikes next year, or the possibility of something potentially much worse if Washington policymakers don't head off an array of fiscal spending cuts and deeper tax increases set to take effect in January.
Read the whole article by the Los Angeles Times here.