Living on borrowed time
Article Abstract:
There is concern about some trends in the US economy, such as a drop in saving by the private sector, overvalued stock prices, and a rise in private sector debt levels. borrowing has risen as a result of consumption and investment increases which have been encouraged by high stock prices. Spending is above income, and net saving has slumped, while the US current account deficit has increased. Slumps in net saving have previously been linked to asset price bubbles followed by damage to the economy. Bill Martin and Wynne Godley are two economists who point to the dangers this poses for the US economy.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
Living on borrowed time
Article Abstract:
US private sector debt levels have reached record levels as a proportion fo the country's gross domestic product, and a collapse in stock prices could have a serious impact. Consumers and companies have both increased their debt levels, and this has partly been in order to buy stocks, with stock buybacks being carried out by companies. Debt has a set value, while financial assets such as stocks can drop in value, and income is needed to pay interest on debt. High debt levels can mean that recessions are more severe than they would otherwise be.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 1999
User Contributions:
Comment about this article or add new information about this topic:
Rainy-day blues
Article Abstract:
The savings rate of the US and many other developed economies has fallen, and there is a debate as to whether this will create problems if, for example, asset prices fall.
Publication Name: The Economist (UK)
Subject: Business, international
ISSN: 0013-0613
Year: 2000
User Contributions:
Comment about this article or add new information about this topic:
- Abstracts: Star billings. Lowe grives 'applling' loss. Network confident despite P&G move
- Abstracts: Beijing Power. No go for Pakistan's sales
- Abstracts: Temporary trouble. Age-old problem. Who will look after granny
- Abstracts: Safeway to buy Randall's Food Markets. Amazon.com taps Wilke to be operations chief. Smith leaves Drugstore.com for venture
- Abstracts: DENMARK: FEW BIDDERS FOR SKANDIA LIV. DENMARK: SKANDIA LIV FOR SALE. DENMARK: TOPDANMARK MAKES ACQUISITION