Read the newspapers and we're at the brink: Global Gloom, Deepening Pessimism, Markets Drop Sharply. Is another Great Depression just around the corner? Is the US slumping to a decade of stagnation a la Japan? Is China now eating the lunch we thought we had bought cheap? Is our financial system just a Vegas vacation, making the house rich but producing no growth?
The answer is no, even though China is nibbling at that burrito and bankers are at the slots. The hero coming to the rescue of the US economy is that trusty favorite, the US Consumer. It's a Consumer with flaws, like any modern hero, with a tendency to binge, and again wielding the weapon that often leads to trouble: the Credit Card.
After 28 straight months of pulling back on the reins, consumers have finally found a level of debt that feels good enough to allow more spending to flow. During those 28 months, the level of consumer debt per person [let's leave mortgages out of this] fell 13 percent, from $8,600 to $7,500. During the last recession with a real estate crash, 20 years ago, consumer debt dropped 14 percent. Sure, many things are different now, but some things aren't.