Household Debt and Spending

My fear is that the current recovery is storing up problems for the future. Household debt continues to decline, and the savings rate has increased. This should be good news for the recovery of the economy: much of the recent recession was about households adjusting spending, debt, and savings to reduce debt and increase savings rates. The rise in the savings rate, however, has been entirely due to lower taxes – households have not substantially adjusted spending lower in response to the recent recession. Government taxes as percent of income will have to rise in the future, and households will have to adjust eventually.

Available as a .pdf here on the Close Mountain site.

About Thomas Coleman

Thomas S. Coleman is Senior Advisor at the Becker Friedman Institute for Research in Economics and Adjunct Professor of Finance at the Booth School of Business at the University of Chicago. Prior to returning to academia, Mr. Coleman worked in the finance industry for more than twenty years with considerable experience in trading, risk management, and quantitative modeling. Mr. Coleman earned a PhD in economics from the University of Chicago and a BA in physics from Harvard College.
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