Tuesday, August 08, 2006

Another Day Older

Bush boom or bust. AP (08.07.06):
"Americans increased their borrowing in June at a much faster pace than expected, with the rise led by higher credit card debt.

The Federal Reserve reported Monday that consumer borrowing rose at an annual rate of 5.7 percent in June, up sharply from a 3.3 percent increase in May."

Consumer Borrowing Rises Sharply in June

"The June advance reflected a rise in consumer debt of $10.27 billion at an annual rate, much larger than the $3.7 billion increase economists had been expecting."

Our friendly analysts are also "expecting consumer borrowing to slow in coming months, reflecting the slowdown that has already occurred in consumer spending."

Why is this a big deal? Consumer spending "accounts for two-thirds of the total economy". It slows down, the economy slows down. Why is it slowing down? They're tapped. No more equity left in their homes. Bloomberg (08.07.06):

"Americans are making greater use of their credit cards to finance purchases because rising interest rates and a cooling housing market make it harder for them to take out home-equity loans.

"'Some consumers are probably going to try to use more credit card debt to cover expenses if access to home equity borrowing is restricted,' Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, said before today's report."

Consumer Credit in U.S. Rose $10.3 Billion in June, Fed Says

As some consumers having nothing left but credit cards to cover the increase in mortgage payments as their ARM resets.

And now, a quote from our favorite Bush Boom cheerleader, Secretary of Commerce, Carlos Gutierrez, 07.28.06: "'President Bush's economic policies have steered America on a path of even greater prosperity and opportunity.'"


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