Is America headed for the Great Recession, part two? The talking heads are still in heated debate, with experts coming down on all sides of the issue. But for those of us who aren’t pundits, there’s a more important question: What should we be doing now, just in case economic lightning does strike twice?
The uncertainty in the air has created confusion. On one hand, many people continue to focus on saving and reducing personal debt. But on the other hand, despite the fact that 40% of Americans surveyed in the First Command Financial Behaviors Index said they expect the economy will fall into a depression, a growing number of middle-class families are taking out new loans: 43% of those surveyed said they have taken out at least one new loan in the last 11 months.
“This growth in borrowing is an unexpected turn in what had appeared to be a relatively straight road toward debt reduction,” said Scott Spiker, CEO of First Command Financial Services, in a prepared statement. Then there’s the just-released Q1 2011 Credit Card Debt Study from CardHub.com, which revealed that consumers paid down 26% less credit card debt than they did in the same quarter last year. CardHub.com projects that consumers will end 2011 with $20 billion more in credit card debt than they started with.
“The implications of this increased spending, should we indeed double dip, is that the impact of the recession is going to be magnified exponentially. The increase in spending will push consumers over the edge much more quickly and will make it much harder for them to stay out of serious trouble,” says Odyssea Papadimitriou, CEO of CardHub.com, a credit card comparison site.
DOWNLOAD FULL PDF >>