Some scary things last long after Halloween. If anything, the ghouls and ghosts that haunt American streets today are a welcome distraction from what’s truly frightening: the precarious state of the household finances.
When the economy is growing—as it is now—the lurking danger of large debts, low incomes, and shaky assets is less evident. But sometimes economic recoveries are built on weak foundations that suddenly start to crack. Other times, healthy economies are bought down by policy mistakes, political upheaval, or volatile asset prices. American households are not in good shape to withstand an economic downturn, whenever (or however) it arrives.
Take the ratio of debt to income for households headed by two important age groups: 30 to 35 year-olds and 60 to 65 year-olds. These groups are important because one is at the start of their financial lives, while the other is nearing retirement. Many years into the post-crisis economic recovery, both groups still carry historically large amounts of debt relative to their income.
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Posted by Arnaldo Rodgers on 5:31 am, With 0 Reads, Filed under Economy, Personal Finance. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.