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Consumer Debt Levels


Over the past few years, the economy has started to recover from the recession. Not only are wages rising, but people are feeling more confident about the future. This is great news when measuring the overall strength of the economy.

However, consumer debt levels are now at the highest point since the last recession. As a general rule, people borrow a lot of money during good economic times. When the economy crashes, people tend to pay down debt and save more money. Rising consumer debt is a forward indicator of a future economic issue. Some economists are starting to get worried about the possibility of another recession in the near future.

Student Loans

The biggest increase in debt over the past several years has been student loans. There are more people going to school than ever before. Although this is a good thing, the cost of college has risen much faster than inflation. Students today are graduating with record levels of student loan debt. This is a major issue for anyone who is trying to save and invest for the future.

Students are delaying various things in their life due to student loans. Not only are students renting longer, but they are waiting to get married as well. Although some politicians have talked about helping students with their student loans, no legislation has been passed to help improve the student loan crisis.

Credit Cards

Credit cards are another major source of debt in our society. Credit cards are convenient to use, and they are a great way to build credit if you pay the bills before they are due. However, a lot of people get into financial trouble because of how easy it is to spend money with a credit card.

There are some people who are trying to reduce their credit card debt. However, the vast majority of people are spending more money than in years past. With a strong housing market, some people are borrowing money to upgrade the value of their home. This is exactly what happened before the last housing crash.

Although the economy is doing well, there are signals that economic growth is starting to decrease. It will be interesting to see if people continue to spend more money in the coming years. As long as consumer debt is rising, the threat of a recession is there.