Monday, July 9, 2012

A weak recovery with a weak foundation built on credit card debt

A big leap in credit card debt in May. It surged by?$8.0 billion, the biggest one month gain since November 2007. ?Here is one explanation from IHS Global:

It is possible, however, that households are relying more and more on credit cards to cover everyday expenses, given that job and income growth are so weak. In fact, revolving debt surged even while core retail sales growth (excluding spending on autos, gasoline, and building materials) stalled. If so, we might see additional increases in credit card debt in the coming months.

And here is President Obama back in 2009:

?We cannot rebuild this economy on the same pile of sand,? he said, invoking a Biblical reference to Jesus? Sermon on the Mount. ?We must build our house upon a rock. We must lay a new foundation for growth and prosperity a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad.?

Not yet.

Tags: Long Recession, U.S. economy

Source: http://www.aei-ideas.org/2012/07/a-weak-recovery-with-a-weak-foundation-built-on-credit-card-debt/

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