What Does Increased Consumer Borrowing Mean To San Diego Economy?
Wednesday, July 9, 2014
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The Federal Reserve reports that consumer borrowing continued to increase through April and May and most economists are celebrating the surge. The number of home and car loans has increased dramatically and credit card balances are also rising. Economists say this indicates an economic confidence that consumers haven't had in years.
But it may also indicate that Americans are returning to the same old credit bubble habits lead to the Great Recession in the first place.
Marney Cox is the chief economist with the San Diego Association of Governments. According to Cox, the San Diego economy has outpaced state and national growth rates.
“Over the last two years, San Diego’s economy has done exceptionally well. I point to employment as a good indicator,” Cox said. “It’s increased by 30,000 jobs each year.”
Cox acknowledged that San Diego’s unemployment rate, currently at 5.7 percent, has dipped below the national rate for the first time since the beginning of the 2008 recession.
However, with lower rates of unemployment, consumer debt levels have increased substantially.
Trish Potts with Money Management International, a nonprofit credit agency, warns that excessive consumer spending can trigger financial problems.
“You don’t want to charge more than what you can afford to payback, because that’s what lead us to the recession in the first place,” Potts said.
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