Five years after economists believe the recession ended, they agree the direction is up. But the tea leaves are still sending messages open to interpretation when it comes to forecasting how far and how fast. Last week, the
The Fed'?s latest data on consumer debt are one example of information that can can support a range of forecasts.
The central bank said nonmortgage debt -- things like student loans, car loans and credit cards -- jumped by
"Continued improvements in the employment picture, as well as home and equity values, mean that consumers are starting to feel more comfortable about taking on debt," Ms. Reynolds wrote.
The same day the Fed released the consumer credit numbers, the
That was good enough to reduce the unemployment rate to 6.3 percent. However, 9.8 million Americans remain unemployed, down 1.9 million from a year ago. The jobless include 3.4 million who have been out of work for 27 weeks or longer.
Household wealth numbers are also looking up, thanks to the housing recovery and the stock market. The S&P 500 rose 30 percent last year and is up another 6 percent this year. According to the Fed, the net worth of U.S. households was
Those numbers might make people who own homes or stocks feel better off enough to take on debt, but there are plenty of people who do not fall into that category. For them, confidence will be inspired by a growth in the size of their paychecks. While income growth has been a little bit better of late, it has generally been subdued during the recovery, Ms. Reynolds said.
One of the big reasons for that was the end of the
That'?s a big reason why consumer credit has been growing faster than personal income during the recovery, said
"The feedback from consumers I speak with is that they don'?t have money to save," she said. "Things are costing more, and it'?s having an effect on their disposable income."
Some of that can be traced to jumps in food and energy prices. The government reported last week that while overall inflation increased at a 2.1 percent annual rate in May, food prices rose at an annual rate of 2.5 percent while energy prices climbed 3.3 percent.
Higher debt and slow income growth have resulted in a lower savings rate. Consumers were saving at about a 5.5 percent clip before payroll withholding rates reverted back to normal levels last year,
There is also pent-up demand for mortgages, but credit conditions there remain tight, he said.
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