5 Reasons why Things are Looking Up for our Economy
September 29th, 2011
The sky is not falling. Even if things are bad, they may be getting better. Here are a few reasons why there is room to think that we have already seen the worst.
- Greece is not as a big of a problem as some might think. For one, the GDP of Greece is only the size of Rhode Island and most of its sovereign debt is held by European investors. It is also worth remembering that the markets gave up on Greece two weeks ago. Greek debt is priced with the expectation that it will fail.
- Consumers are deleveraging. Consumers have shed almost one-third of the debt that they held two years ago. One easy way to get rid of a lot of your debt is to go into foreclosure. It is pretty clear that we have been following that course for some time.
- People are doing a better job of paying their credit card bills on time. Delinquincies now make up 4.1 percent of outstanding balances. That represents more than a twenty percent drop from the rate a few years ago.
- It is easier to get a loan: Banks are not making it easy to get a loan, but compared to 2008, there is a deluge of capital available to borrowers.
- People are buying more consumer durables. You can put off buying a new refrigerator for only so long. At some point, you absolutely need to buy one. It is the same thing with tires. Sales of durables have increased during each of the last two months.
