The past year has seen Americans paying down their combined consumer credit debt by billions of dollars, bringing the overall amount back to levels not seen in several years. However, the country is still facing almost $900 billion in revolving debt, which primarily consists of credit cards, at a time when delinquencies and unemployment remain high.
The situation presents mixed prospects to the general economy, which depends heavily on consumer spending to sustain its growth. One key indicator in the short term will be whether the current holiday shopping season turns out to be significantly stronger than the weak one recorded last year, when the recession was still underway.
With these things in mind, a recent Wall Street Journal report says that many economic experts believe that the recession has indeed brought about a new and permanent emphasis on spending responsibly and keeping track of personal finance issues.
“We seem to be at a cultural inflection point that we haven’t seen since World War II. People are getting used to being careful, and I don’t know how you undo that,” Jim Taylor of the Harrison Group was quoted as saying in the newspaper. However, the Journal also quoted a BMW executive as saying he was “yet to be convinced” that the newfound thriftiness among consumers would really be permanent.
For the foreseeable future, millions of Americans will have no choice but to curtail their spending. That’s because even as the economy recovers, the national unemployment rate is projected to remain at or above 10 percent for at least another year.
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