Thursday, September 10, 2009

US households are cutting their debt levels

US households are focusing on cutting back debt levels during the recession.

Consumer credit fell in July by USD 21.6bn compared with June, according to the Fed, following another cute, USD 15.5bn in June.

With US consumers are focusing on paying off debt, that of course affects consumer spending that makes up about 2/3 of the US economic activity.

That is where, in theory, where the US stimulus package comes in, ie public spending, to make up for the slack and more, but that increases an already huge US national (federal) debt!

The complicated signals from the (complicated?!) US economy also include: US manufacturing grew in August for the first time in 19 months and home sales reached a two-year high in July.

Have economic systemics become a runaway train?

Note: Compare the US to Germany. Germans it seems had high levels of savings, as opposed to being in debt, and that helped them weather the storm, and Germany, aided by exports, is out of the recession since Q2 2009!

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Nick

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