Good News First

last week the Federal Reserve released a series of reports regarding the state of the American people. The good news is that total household net worth is now $45.91 trillion, a new record and a sign that the economy is growing.

Net worth is everything we own minus everything we owe. The bad news is that total consumer debt grew at a rate of over 9% in the second quarter of 2004 and at an annual rate of 6.5% in July. While this debt growth was accompanied by asset growth, it is still out of control.

Americans are borrowing more and more against their homes, and that borrowing and the consumption it engenders is based on the idea that home prices will continue to increase, something that may have already stopped in parts of the country. It is dangerous for our nation to owe so much.

Timothy Burger