We are coming off a time of unprecedented spending. Home ownership percentages went much higher than normal. Credit was easily obtained and very cheap. Home prices skyrocketed and people took advantage of this increase in equity to further fuel the economy. Now that the good times are over does it not surprise people that Americans are saving more, deleveraging, staying away from homes and otherwise hunkering down?
Credit is shot, interest rates have risen and floating rate mortgages are adjusting. The US consumer is not going to bail us out this time. Frankly, I feel as if this is something we are going to have to ride out. All the poking and prodding is almost irresponsible. It is also unrealistic.
Consumers can’t do it anymore. Credit standards have been tightened dramatically. Those who have credit are paying it off ASAP because of the increase rates. Others cannot keep up and are seeing their credit worthiness destroyed. Either way that amounts to people not spending.
