According the U.S. Federal Reserve on Thursday, U.S. household debt fell to 113% of disposable income, down from 118% at the end of 2010. Some government officials and economists believe this is great news because it means U.S. households have more borrowing capacity and will spend more money to boost the U.S. economy.
Indeed that is what happened late in 2011, as households for the first time since the second quarter of 2008 increased their borrowing to pay for cars, gifts and educational expenses. But dear reader, this is no cause for celebration. That people must go ever deeper into debt, already spending more than they earn, as the foundation for a U.S. economic recovery says that it is being built on quicksand.
Please continue to manage your money carefully, slash unnecessary overhead and take prudent actions to protect your job. Eventually, the U.S. will rebuild itself on a solid foundation but for now, it is trying to get back on its feet by borrowing to buy largely foreign made goods, spending money it can't afford.
Dick
To learn more, please see "Consumers Shape Up Their Finances," The Wall Street Journal http://online.wsj.com/article/SB10001424052970204603004577269152411309714.html?mod=googlenews_wsj
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