Credit for the Recovery
By DANIEL GROSS
NYT
EVERY time the United States suffers a recession, trendspotters hasten to identify signs of frugality, extol the rediscovery of thrift and find evidence that Americans are finally (finally!) kicking their demon debt habit. We crack open history books to locate the anti-debt impulse in pre-revolutionary America and troll through quotation collections for ammunition. I’ve been around long enough to go through this exercise twice — first in the early 1990s and then in 2001 after the dot-com bust. Here we go again.
Since the comprehensive, economy-wide debt bubble of the aughts burst spectacularly in September 2008, Americans, we are told, have rediscovered their inner skinflint. Indeed, the savings rate, which fell into negative territory in 2005 at the height of the boom, bounced back strongly. Through 2009 and thus far in 2010, Americans have been setting aside 5 percent to 7 percent of disposable income as savings. Web sites like couponmom.com and Groupon have attracted millions of penny-pinching users.
When the Federal Reserve reports figures on consumer credit, despite the dry prose, we conjure up visions of shoppers throwing their Visa cards into public bonfires. “Household debt contracted at an annual rate of 2 1/4 percent in the second quarter, the ninth consecutive quarterly decline,” the central bank reported last month. The outstanding balances of revolving credit accounts — i.e. credit cards — peaked in 2008 at a little less than $1 trillion, and have fallen for 22 straight months, to $827 billion in July 2010.
It’s a great story — if you believe it.
(More here.)
NYT
EVERY time the United States suffers a recession, trendspotters hasten to identify signs of frugality, extol the rediscovery of thrift and find evidence that Americans are finally (finally!) kicking their demon debt habit. We crack open history books to locate the anti-debt impulse in pre-revolutionary America and troll through quotation collections for ammunition. I’ve been around long enough to go through this exercise twice — first in the early 1990s and then in 2001 after the dot-com bust. Here we go again.
Since the comprehensive, economy-wide debt bubble of the aughts burst spectacularly in September 2008, Americans, we are told, have rediscovered their inner skinflint. Indeed, the savings rate, which fell into negative territory in 2005 at the height of the boom, bounced back strongly. Through 2009 and thus far in 2010, Americans have been setting aside 5 percent to 7 percent of disposable income as savings. Web sites like couponmom.com and Groupon have attracted millions of penny-pinching users.
When the Federal Reserve reports figures on consumer credit, despite the dry prose, we conjure up visions of shoppers throwing their Visa cards into public bonfires. “Household debt contracted at an annual rate of 2 1/4 percent in the second quarter, the ninth consecutive quarterly decline,” the central bank reported last month. The outstanding balances of revolving credit accounts — i.e. credit cards — peaked in 2008 at a little less than $1 trillion, and have fallen for 22 straight months, to $827 billion in July 2010.
It’s a great story — if you believe it.
(More here.)
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