Thursday, Dec. 20
Posted 4 p.m. EST
Credit guru talks recession
Recession rhetoric has been consistent throughout the year, but when credit
guru Robert Manning recently shared his prediction for 2008, I was interested
to learn his views.
Manning wrote the widely acclaimed book, "Credit
Card Nation: The Consequences of America's Addiction to Credit," which
looks at the escalating use of credit cards and the consequences of consumer
debt. He is a research professor and director of the center for consumer financial
services at Rochester Institute of Technology in Rochester, N.Y.
Manning has predicted a consumer-led recession by the summer of 2008, according
to an AXcess
News article. He believes consumers' ability to further mobilize the U.S.
economy by taking on higher levels of mortgage and consumer debt has reached
its limit this year. Some signs indicate households have begun postponing major
purchases to brace for tough economic conditions and increased housing demands,
he says.
This news was a little perplexing to me because earlier this week, I felt a
little relieved when I learned how some economists and forecasters surveyed
by WSJ.com, The Wall Street Journal Online, are taking a more optimistic approach.
They say the economy has a 38 percent chance of a recession and most likely
will avoid one altogether.
The reasons listed in the WSJ article, "Why
Economists Are Betting A Recession Won't Happen," (subscription required)
include:
- A proactive Federal Reserve, which is expected to ease rates through the
middle of next year.
- Rising demand for U.S. goods as the global economy grows.
- The weakened dollar has made U.S. exports more appealing to foreign consumers
and has benefited U.S. producers who compete with foreign producers.
- New hires have slowed but sharp increases in layoffs haven't occurred.
- State and local government spending remains strong.
Does this talk of recession have you feeling a little anxious? What do you
think will occur?
Tell us at bankruptcyblog@bankrate.com.
Readers response to stashed cash survey
"Don't get me started!" a Beating Bankruptcy reader exclaimed in
response to a question I posted. I wanted to know whether you are comfortable
with the amount of cash you have stashed. Most Americans are not, a recent survey
found.
The reader owes $1,400 and is slowly coming out of bankruptcy, making $50 monthly
payments in a Chapter 13 repayment plan. This survey provoked a conversation
between our reader and their 20-year-old son.
"…we were talking about things over dinner and I said, why is the
rate being lowered --they should be raising it to encourage people to save money.
My son commented back that our situation is akin to what happened in the 70's
-- stagflation -- stagnant economic growth plus inflation. Is he right? (I'm
betting he is.) "
What do you think? Share your thoughts at bankruptcyblog@bankrate.com.
