What The Climbing Debt Defaults Really Mean For The Economy

What The Climbing Debt Defaults Really Mean For The Economy

By many measures, the economy looks strong.

The stock market — despite a fairly steepWh correction a week ago — is still well ahead of where it was a year ago and is trending up. Unemployment is at historic lows, wages are rising given the tight labor market and consumer spending has been keeping pace.

Dig in a bit deeper, however, and the numbers become a bit less confidence-inspiring, since the bulk of that consumer spending is being done on credit, as household debt is skyrocketing.

That by itself isn’t worrisome news: Credit can be useful leverage if used correctly. But the data indicates that for an increasing number of users, debt is not being managed correctly. Late payments and out-and-out defaults and charge-offs are on the rise across a few lending segments.

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