So, are we doing better or not? Has the national economy at least stopped snarling at the middle class sufficiently enough over the past couple years to enable most challenged debtors to regain their financial footing?
These questions certainly seem reasonable enough to ask, and at this time. After all, the monstrous housing collapse and attendant credit crisis — the so-called Great Recession — that was visited upon Texas and the rest of the country is commonly gauged by economists to have mushroomed in 2007. That was long enough ago to enable some perspective now and to seemingly allow millions of beleaguered consumers time to claw back from troublesome debt levels toward renewed financial stability.
Then again, maybe not. A financial writer in a recent Wall Street Journal article argues that, while high numbers of middle-class consumers have in fact been able to pare down high debt levels in recent years, that debt relief is now being undercut by new borrowing.
Typically, that might be just fine, states commentator Rex Nutting, but these are not typical times. As Nutting notes, what has always fueled the national economy is increased consumption that is driven in turn by steady job growth and wage increases for American workers.
Over the past several years and during what seems to be a return toward some economic normalcy, that has not been the pattern, says Nutting. Lending policies have been liberalized, with interest rates remaining notably low, which has encouraged many people to once again borrow. On the flip side, though, rising incomes simply have not materialized for much of the middle class, meaning that new purchases are not being routinely paid off. Rather, America’s collective debt level is once again rising, and ominously.
Nutting maintains that until the middle class — the nation’s forward-moving catalyst — is once again viable and thriving, the national economy will simply sputter.
That is certainly food for thought.
Source: The Wall Street Journal, “Middle class is drowning in debt, hobbling the economy,” Rex Nutting, June 27, 2014