consumer debt vs. 10, 20 years ago

Running head : Consumer debt

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Table of Contents TOC \f \o "1-9 " \t "Heading 2 2 Heading 1 1 Heading 1 1 Heading 1 1 Heading 2 2 Heading 2 2 " Introduction 3

Status of Consumer debt 3

Consumer debt In the US between 2000 and 2003 4

Consumer debt ten years ago . 6

Consumer debt twenty years ago . 7

Comparison of consumer debt 10 and 20 years back 10

Borrowing pattern in 1998 11

Conclusion . 11

References : 12

Introduction

p The scale of consumer debts has made very many house hold in the United States to be extremely vulnerable to economical shocks from the fiscal management and external factors which includes wars , terrorism acts and rise in oil prices . Economic downturn is likely to cause social and economic problems especially for the many millions of people who are struggling to repay their debts . Debt can be triggered at any time by the various types of shocks in the economy which may make them to rise higher and consumers to continue to be in greater debts

With an economy that is uneven , the class-based distribution of income is the factor which determines investments and consumptions of individuals and households . In the United States , the average personal consumption expenditure which are rated in the bottom 60 of income distribution equaled or even exceeded the 2003 average pre-tax income The fifth of the population which was just over the 60 used up a five-sixth of their pre-tax on their consumptions . However in contrast those who are higher on the income pyramid and the relatively well to do people use a smaller percentage of their income in the personal consumption as their incomes are more devoted to investments (US department of labor 2005

Status of Consumer debt

The United States consumer debts in the current times has hit staggering levels after reaching doubling and even higher levels over the past ten years . The most recent figures from the Federal Reserve Board shows that the consumer debt in October 2003 went up to 1 .98 trillion dollars from the consumer debt three years ago which stood at 1 .5 trillion dollars However these figures only represent the credit cards and car loan debts but it does not include mortgages which approximate to 18 ,700 dollars for every United States household . In April 2003 , the outstanding credits which included mortgages and all other debts reached the 9 .3 trillion dollars which represented an increase from the 7trillion dollars mark which was recorded in January 2000 . from credit cards alone stood at 735 billion dollars and the households which carry balances had a credit balanced whose estimates averaged to 12000 dollars

Due to the circumstances where consumption and investments heavily depend on the spending of the people who are in the low income stream there is a supposed stagnation and even a decline in the real wages which is likely to result to crisis tendencies for the economy due to constraining of the...