Consumers might be spending more than they're earning and that could be very bad for the economy, according to the Post and Courier.
With the stock market climbing, consumer confidence on the rise and homebuilders are feeling more optimistic, it would seem as though the state of the economy is improving. But personal debt could prove to be the demise of the economy, according to the Post and Courier.
Bruce Bittles, chief investment strategist for the wealth management firm Robert W. Baird and Co., doesn't disagree with the recent economic job numbers from Washington, D.C., but he's noticed some potentially bad signs. He's suspect of the sustaining power of the economic rebound, the Post and Courier reports.
A major concern for Bittles is consumer spending, according to the article. This drives two thirds of the economy. Shoppers have been feeling more confident, and consequently have spent more money, especially on more expensive items like cars. Bittles is worried this won't last.
For the last 18 months, overall wages have been stagnant and been in the red for the last nine months when inflation is factored in, according to the Post and Courier. That suggests that people are spending their personal savings, which is never a good sign.
"That's why we can't have a sustained boom like we have in years past," Bittles is quoted as saying.
Bittles called the personal debt is an "anchor" on economic growth because the growing cost of paying it down sucks everything out of the economy, according to the Post and Courier.