Many economists have been mystified that even though the recession is “over”, American consumers have not opened their wallets and started spending again like they normally do at the end of a recession. News report after news report has encouraged Americans to grab their credit cards and to head out to the stores and start spending again, but it just is not happening. So why are things different this time? Well, for one thing there is a lot of fear in the air. Poll after poll after poll shows that faith in the economy has collapsed and that large numbers of Americans fear that things are going to get even worse for the economy soon. But for millions of other Americans there is another problem – they couldn’t spend more money if they wanted to. The truth is that living on credit for decades has caught up with us as a nation. Americans are absolutely drowning in mortgage debt, car loans, credit card debt and student loan debt. As wages have stagnated, credit has enabled many of us to pursue the American Dream and to live far beyond our means, but that doesn’t last forever. Now tens of millions of Americans are completely and totally tapped out. But without the return of the voracious American “consumer” there is not going to be a full economic ”recovery”.
For decades, the American consumer has always returned with a vengeance. Continually expanding debt loads have fueled a level of prosperity that most of humanity only dreams of. But unfortunately, no debt bubble lasts forever.
Now the consumer debt bubble in America has started to pop, and many are wondering what is going to fuel the U.S. economy if American consumers are unwilling or unable to do it any longer.
The truth is that a very large percentage of Americans consumers is either incredibly scared or totally broke or both. Many economists and politicians are desperately hoping that we can crank up the consumer debt spiral one more time, but tens of millions of Americans are already in debt up to their eyeballs. The reality is that you just can’t squeeze blood out of a rock.
But that doesn’t mean that the politicians running for office in November won’t try to convince us that this thing can be fixed if we will just elect them and their buddies. We will be told that the right combination of tax cuts and/or government spending programs will get us on the right track.
Sadly, though, the U.S. government and our state and local governments are all drowning in debt too. There is not much more they can do for the economy. Even the Federal Reserve is about out of ammunition at this point.
The truth is that the U.S. economy is a dead horse and it just does not want to get up and start running once again. You can only push a debt bubble so far, and it looks like we may have reached our limit.
The following are 20 signs that American consumers are completely and totally tapped out at this point….
#1 During the first quarter of 2010, the number of loans that were at least three months past due in the United States increased for the 16th quarter in a row.
#2 Vacancies and lease rates at shopping centers across America continued to get worse during the second quarter of 2010.
#3 One out of every seven mortgages was either delinquent or in foreclosure during the first quarter of 2010.
#4 CNBC is reporting that the nation’s banks repossessed a record number of homes in August.
#5 According to RealtyTrac, a total of 1.65 million U.S. properties received foreclosure filings during the first half of 2010.
#6 23 percent of all U.S. homes with a mortgage were “underwater” as of the end of June. That means that the “home equity boom” is officially over.
#7 Existing home sales fell 27 percent during the month of July, and new home sales declined to the lowest level ever recorded in the same month.
#8 Construction of new homes in the U.S. and applications to build new homes in the U.S. both fell to their lowest levels in more than a year during the month of July.
#9 Americans now owe more than $849 billion on student loans. That is a new all-time record.
#10 According to data that was just released, the number of U.S. college students who defaulted on their student loans increased significantly in the fiscal year that ended in September 2008.
#11 Bankruptcy filings in the United States increased 20 percent during the twelve month period ending June 30th.
#12 In all, a total of nearly 3 million Americans declared bankruptcy over the last two years.
#13 A staggering 25 percent of Americans now have a credit score below 599. Without good credit, these consumers will not be buying much of anything.
#14 According to Gallup, confidence in the economy is way, way down compared to to the same period last year.
#15 According to a poll taken in 2009, 61 percent of Americans ”always or usually” live paycheck to paycheck. That was up substantially from 49 percent in 2008 and 43 percent in 2007.
#16 The number of Americans in the food stamp program passed the 41 million mark for the first time ever in June.
#17 As of June, the number of Americans on food stamps had set a new all-time record for 19 months in a row.
#18 One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.
#19 In all, a total of about 45 million Americans were living in poverty during 2009.
#20 According to the Department of Housing and Urban Development, the number of U.S. families with children living in homeless shelters increased from 131,000 to 170,000 between 2007 and 2009.