Research Shows We're Digging Ourselves Back Into Debt
"The alarmng part is in this quarter, Americans got $6.5 billion more in debt, and if you look at the increase in debt between the second and third quarter combined, that's 11% higher than the increase last year," says Odysseas Papadimitriou, CEO and founder of CardHub, of his company's new research, which shows that our country is definitely returning to its overspending ways. While we paid down our debts in the first quarter of 2009 and the first quarter of 2010, our collective debt repayment this year was 9% smaller than last year, Papadimitriou says, and it's gotten worse from there.
This report goes into more detail about what turned out to be a relatively brief period of fiscal sobriety and comes to an even more sobering conclusion: By the end of the year in a few weeks from now, we'll have completely canceled out the dent we'd made in our massive credit card debt.
As Papadimitriou points out, this is even worse than the massive amounts of debt we took on earlier this decade at the peak of the housing and credit bubbles. Back then, our bankers, mortgage brokers and financial advisers were all telling us real estate would keep climbing and our net worth would just go up forever. That obviously didn't happen, but it's very worrying that now, even though we've just been through two years of a punishing economy, we seem eager to forget those lessons and go back to spending.
Are Americans really returning to the kind of haphazard spending habits that characterized the credit bubble? And the bigger question: If that kind of spending couldn't be sustained in a bubble, how can it possibly be sustained in an economy with a still-high jobless rate and a decimated real estate market.