CONSUMER DEBT MORE THAN DOUBLES IN DECADE

January 6, 2004

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Consumer debt has more than doubled in the past 10 years to record levels, making it hard for many families to cope, the Associated Press reported. Consumer debt hit a record $1.98 trillion in October 2003, according to the most recent figures from the Federal Reserve.

That debt — which includes credit cards and car loans, but not mortgages — translates to some $18,700 per U.S. household. Historically, there is a close correlation between household debt and bankruptcy filings, now at a record 1.6 million annually.

At the same time, the government says the nation’s savings rate dropped to just 2 percent of after-tax income in the first half of the year. That means many people lack the means to deal with financial emergencies, much less their eventual retirement.
Experts worry about the impact not only on individual families, but on society as a whole.

“The Depression generation is passing on, and we’re losing their values,” said Howard Dvorkin, president of the nonprofit Consolidated Credit Counseling Services in Fort Lauderdale, Fla. “Now we’ve got an entire generation that doesn’t know anything about thrift and careful spending. It’s tearing the fabric that made this country great,” he said, reported the newswire.

The nation’s credit card debt currently stands at $735 billion, or nearly $7,000 per household. And since about 40 percent of card users pay their balances in full each month, the household card debt of those who carry balances is closer to $12,000, according to AP.