Short-term Stimulus, But Longer-term?

According to an article that appeared on CNBC’s website, the U.S. consumer continues to take on a greater debt burden.

  • Total household debt rose to an all-time high of $13.15 trillion at year-end 2017, according to the Federal Reserve Bank of New York’s Center for Microeconomic Data.
  • The report said it was fifth consecutive year of annual household debt growth with increases in the mortgage, student, auto and credit card categories.

The debt load grew by nearly $200 billion in the fourth quarter alone. The U.S. consumers have now amassed more than $1 trillion in both auto and student loan debt while ringing up more than $800 billion in credit card debt.

This total debt may be an economic stimulant in the short-term, but it eventually has to be paid down, which could weaken demand for goods and services longer-term. Furthermore, we have more than 94 million age-eligible workers on the sidelines and an LPR of only 62.7%, which certainly curtails their ability to remain robust participants in the economy.

The benefits from the recent tax law changes do not provide the “average” American worker with significant tax relief, especially if one lives in a “Blue” state with heavier property tax burden.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s