By ERIC MORATH After years of struggling to shed debt, Americans are finally gaining enough confidence in their finances to step up borrowing for autos, homes and other goods—a shift that could boost the economic recovery.
Auto lending increased by $20 billion in the second quarter from the previous quarter, the largest gain in seven years, Federal Reserve Bank of New York figures showed Wednesday. Americans also increased their credit-card balances, reversing a first-quarter decline, and took out more mortgages.
At the same time, total consumer debt declined by $78 billion last quarter to $11.15 trillion, putting it 12% lower than its peak in the fall of 2008 during the recession and at its lowest level since 2006.
Most of the adjustment was due to a decline in the amount of debt tied to outstanding home loans, likely due to lenders' write-offs from foreclosures and recent gains in home prices that helped owners sell.
The new data showed that Americans, four years into a lethargic economic recovery, are making substantial progress in a long slog of deleveraging—cutting debt that has been weighing down households for years.
Wal-Mart Stores, the nation’s largest retailer, missed analyst expectations in the second quarter and lowered its full-year profit and sales guidance Thursday, saying consumers were still weighed down.
Coming a day after Macy’s missed expectations — its first miss in 25 quarters — and lowered annual guidance, and the same day that Kohl’s did the same, the retailers’ results suggest that consumers in both the low and middle sectors of the market are not yet being buoyed by an improving economic picture.
Because there is no improving economic picture, the rich are getting richer and the middle and lower classes are falling behind.
The QE money has not made it into the general economy that is why inflation at the moment is subdued.
All those lovely stats of boom times a coming are only of benefit to a small percenatage of the US population, most are going nowhere or even backwards financially still.
There are some people who seem angry and continuously look for conflict. Walk away, the battle they are fighting isn't with you, it's with themselves.
The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it. The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.
Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
I are considering buying and selling again. I consider myself a proxy for the average (hate to say it) yuppie Sydney family so if I'm considering buying and selling then I would say the market is feeling confident.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
I are considering buying and selling again. I consider myself a proxy for the average (hate to say it) yuppie Sydney family so if I'm considering buying and selling then I would say the market is feeling confident.
Buying and then selling is an act of confidence in the market, I agree. Clearly you feel that the reward outweighs the obvious risk.
Any expressed market opinion is my own and is not to be taken as financial advice
Westpac’s detailed analysis of its Consumer Sentiment Index, the Redbook, is out.
The good news for the domestic economy and retailers around the nation is that the post-budget slump appears to be behind us, in both sentiment and spending.
Westpac had previously warned not to be too pessimistic about the fall in sentiment based on past experience and notes that after the strong bounce in consumer sentiment this month:
the ‘CSI±, our modified sentiment indicator that we favour as a guide to actual spending, posted a solid 3.7% gain in Aug and is now pointing to positive, albeit sluggish, growth in per capita spending of around 0-½%yr (1¾-2¼%yr once population growth is factored in)’.
Crucially Westpac says that the latest sentiment reading “reverses nearly all of the Budget-related sentiment decline. Meanwhile the latest data on retail sales and from private business surveys provides broad confirmation of our view”.
It may not be a boom, but regardless, this is still good economic news.
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