FIRE Economy | timiacono.com

Generation “X” = Generation “Debt”

You’ve got to study the methodology a bit and pay careful attention to the legend in the chart below from this study by the St. Louis Federal Reserve on household debt, but, after you do, you quickly realize that Generation “X” (those born between 1965 and 1980) is having an increasingly hard slog now that the best part of the U.S. credit expansion is decades behind us and about all the U.S. economy has left now is the hope for more asset bubbles that they might somehow get on the right side of.

It looks like the Baby Boomers (I’m very late in that generation) aren’t doing much better than the Gen Xers and there’s surprisingly high debt for previous generations as indicated by the open circle, open square, and open triangle symbols above. All in all, not good.

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Second Quarter GDP Growth Revised Higher

The Commerce Department reported that the U.S. economy expanded at an annualized rate of 4.2 percent in the second quarter, slightly higher than the 4.0 percent estimate provided a month ago. This follows a first quarter weather-related decline of 2.1 percent.


In this second of three estimates for the April-to-June period, the increase in nonresidential fixed investment was larger than previously reported, while the increase in private inventory investment was smaller than previously estimated.

Interestingly, the Congressional Budget Office just released a downwardly revised estimate of 1.5 percent for 2014 economic growth (previously, it was 3.1 percent), meaning that they’re not very optimistic about the second half of the year. With an average growth rate of 1.05 percent for the first six months, this puts second half growth at just over a 2 percent rate meaning that, once again, a strong “second half rebound” is not likely to materialize.

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Those Pesky Student Loan Balances

The graphic below from this story at Vox serves as a timely reminder that, while much of the rest of the U.S. credit market continues to improve after a multi-year bout of deleveraging, student loans are an ongoing problem for many Americans, both young and old.

There are more and more reports of senior citizens having trouble paying back student loans (mostly as co-signers) and, lately, of social security checks being garnished when these co-borrowers fall behind.

The other charts in the Vox story are even more interesting than the one above, particularly the last one that really doesn’t paint for-profit higher education in a positive light.

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The Conference Board reported that consumer confidence reached a fresh seven-year high this month as Americans are increasingly optimistic about the economy in general and the job market in particular. The group’s confidence index rose from a downwardly revised 90.3 in July to a new recovery high of 92.4 this month as the present situation component jumped 6.7 points to 94.6. The expectations component dipped 1.0 point to 90.9.

Earlier, two reports indicated slowing momentum in the nation’s housing market as the Case Shiller Home Price Index showed declining year-over-year gains, down from 9.3 percent to 8.1 percent, and the FHFA reported price gains dropped from 5.5 percent to 5.1 percent.

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