Louis Hyman, an expert on consumer debt, labor relations law and history, and professor at Cornell University’s ILR School, discusses Federal Reserve Bank data indicating that consumer debt increased by 2.1 percent in the fourth quarter of 2013 – the largest increase since 2007, before the recession.
“Though the Fed sees that households are borrowing again it also means that banks are lending again. Either they are lending because borrowers' incomes are more stable, or more likely, that they are desperate to put their money somewhere.
“The fall in home equity loans is treated as a ‘good thing’ but a credit card debt today can easily become a home equity loan tomorrow.
“At least home equity loans, if spent on actual home improvements, would boost construction work. It is unclear how much of that credit card consumer dollar is going overseas.”
Media Note: Hyman has co-produced one of the first major historical MOOCs, “American Capitalism: A History,” tracing the history of capitalism from the 15th century to today. It is a global history of American capitalism that is designed to help explain how the middle-class market for consumer goods is eroding.