Bennett pleased by 'American Dream' debt

Since the recession officially ended in 2001, Americans have continued to fall deeper into personal debt. But Joint Economic Committee Chairman Bob Bennett, R-Utah, says that's actually good, because most of that new debt came as Americans took advantage of low mortgage rates to buy homes.

"It is encouraging that more and more families are now able to invest in the American dream of home ownership," Bennett said as his committee released a new report on "Household Debt and the Economy."

While many economists worry that growing levels of debt may be a drag on the economy and hurt families' ability to pay bills, the report said more than 90 percent of recent household debt "can be attributed to the growth of home mortgage debt spurred by historically low mortgage interest rates."

He said the low rates spurred "the largest percentage of homeownership in American history."

The report said home mortgage debt has increased by 25 percent since the end of the recession. In contrast, consumer debt from credit cards, car loans and other borrowing increased by only 4 percent over the same period.

As a share of total household debt, consumer credit has fallen to its lowest level in a decade, the report said. Since the end of the recession, the report said disposable personal income increased at an average annual rate of 3.4 percent, while consumer credit rose at a rate of only 1.6 percent.

The report also said that total household assets are now about five times larger than the size of the entire U.S. economy, while total mortgage debt is about 60 percent of the size of the gross domestic product and consumer credit debt is about 18 percent of the GDP.

The report noted that Federal Reserve Chairman Alan Greenspan said earlier this year that "the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress."

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