Jeff Koeze's Blog Good Food, Good Business, and the Good Food Business

8Dec/090

Why I Worry

I am a worrier.  And a pessimist.  I admit it.   And this is why I worry about the economy for the next few decades.  Yes.  Decades.

As the EconomicPic blog points out:

Until the recent crisis, consumer credit had exploded, now accounting for ~17% of nominal GDP, about twice the level from 50 years ago. All in, household debt is now more than 120% of GDP, twice the the level of just 25 years ago.

Think about that.  It took 50 years for consumer credit to double.  It has taken 25 years for total household debt to double.  Perhaps we don't have to go back to the debt levels of 1959 or 1984.  But we need to get a good deal of the way back, and with consumers representing 70% of US GDP that means household dollars going into debt reduction rather than nuts and chocolates.  Or cars, houses, and clothing.

As EconomicPic points out, our options for fixing this are extremely limited.  And I'll point out: it will take years and years.

Source:  EconomicPic, http://econompicdata.blogspot.com/2009/12/deleveraging-consumer-and-economic.html

UPDATE:

It seems I'm not alone.  The National Federation of Independent Business says small business optimism is in the tank.  Read Bonddad Blog full post here.  This is especially bad news on the jobs front, as small businesses are key to future job creation.

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