Trouble ahead: Household debt rises 9.1 percent!
Think the economy's getting better? Think again.
According to the Fed's quarterly flow of funds report, household debt rose by
9.1% in the third quarter, twice the rate of net worth growth. Household debt
stands currently at $9.95 trillion. This does not bode well for the
future.
Consumer credit increased at a 6% annual rate for
the quarter to $2.1 trillion, while disposable income increased at only a 3%
annual rate to $8.6 trillion. Households' net investment was negative for the
first time in more than a year at minus $2.7 trillion. Households are also,
curiously enough, disinvesting in financial assets. Investments dropped by $172
billion, the fifth decline in the past seven quarters. This indicates that the
stock market is increasingly finding itself dependent on foreign investment.
With the dollar weakening, this suggests a catastrophic decline in stock values
may strike sometime in 2005.
Debt owed
by businesses also rose—by a rate of 5.1%, the highest in five
quarters.
Posted: Fri - December
10, 2004 at 08:37 PM