<http://www.nytimes.com/2006/09/03/weekinreview/03greehouse.html> September 3, 2006 Borrowers We Be By STEVEN GREENHOUSE
WITH their raises often lower than the inflation rate, millions of Americans have embraced the same strategy to maintain their living standards — borrowing and then borrowing some more. As a result, debt payments now consume 19.4 percent of the income of the average American family, and 23 percent of the families in the bottom two-fifths of families by income devote at least 40 percent of their income to debt payments. With debt burdens so high, some economists fear a new wave of foreclosure and personal bankruptcies now that interest rates have climbed. "Real median incomes have gone nowhere, and for lower-income households real incomes have been falling," said Mark M. Zandi, chief economist at Moody's Economy.com. "If they want to maintain a certain level of spending, they have to take on more debt." Household debt rose to 132 percent of disposable income last year, partly because many Americans have pushed their credit card debt to the max and because many, including many high-income Americans, have piled on the mortgage debt. Last year, for the first time since the Depression, the personal savings rate for the nation fell below zero, meaning that Americans are spending more than they are earning (and are saving no money on a net basis). -- Yoshie <http://montages.blogspot.com/> <http://mrzine.org> <http://monthlyreview.org/>
