Consumer Credit Reaches Record Levels - Cause for Concern, Not Panic: C.D. ...
18.05.12
Finds that debt levels associated with consumer
credit are higher than at any point in recent history, and are now
higher than those of American households. This raises concerns about
the sustainability of household finances, the risks to the broader
economy and the merits of government intervention, he says. "At
present, there is no cause for panic," says MacGee, "but there are
warning signs in the numbers that are reason for concern, and merit
close watching."
While recent debates have largely focused on the housing market and on
the risks associated with household mortgage debt, MacGee looks more
specifically at consumer credit -auto loans, credit card debt, and
lines of credit - and personal bankruptcies. Consumer credit accounts
for roughly 45 percent of total household interest payments, he notes,
and often offers variable interest rates, leaving borrowers more
vulnerable to higher interest rates. Further, the rapid expansion of
new consumer credit products, especially home equity lines of credit,
raises real concerns about whether lenders and borrowers have been
overly optimistic.
Source: SYS-CON Media (press release)