Summary With personal spending, credit card use and bankruptcy at an all time high the public at large will be in trouble if a recession comes. America seems to be gearing up for a big fall and maybe the Generation Xers are correct in assuming they will never be out of debt. America is the number one consumer nation and everybody is trying to Akeep up with the Joneses.@ Unfortunately, a salary of $25,000 a year does not go as far as a salary of $60,000. The baby boomers were a spoiled group who had parents that wanted to do better for their children. To this end, the children got what they wanted although they still had values. The baby boomers have not conveyed those values to the Generation Xers, who have been able to get what they want through the use of personal credit, but do not have any restraint. The Federal Reserve Board did a study that showed that card balances during the past three years were being paid off before the interest accrued. This was so-called Aconvenience use@ of the cards. MasterCard International, however, unveiled data that showed that banks are earning interest on 91% of credit card balances (Seiberg 1997). This is good for lenders, but may not be so good for the public. Borrowing should be on the rise since the Census Bureau predicts the percentage of people in their prime borrowing years will peak in 2000. The strong economy can be credited for the rise in debt levels, showing the confidence Americans have in the economy. The problems will come when the economy begins to weaken. As for the future, Alan Greenspan of the Federal Reserve Board has mentioned, casually, that he will be lowering interest rates. This will make people spend even more. With unemployment at a low people feel more secure, which also contributes to spending. The employment picture may change, though, with the problems in the economy of certain Asian countries. An influx of immigrants may change the employment picture. ...
