Economists have pointed out that American households took on substantial debt over the past 30 years. Many households are now scrambling to pay down on debt, and this is one reason why consumer spending has been slow. But do all households have to worry about debt? Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
“Well … first of all, we want to say that debt — consumer debt — is very important to some households, but I think in some sense we have exploded this problem and applied it to everyone, because, for example over 20 percent of households in our country have no consumer debt at all.
“And indeed when you look at — when you hear the statistic that well the average person who has debt has $97,000 worth of consumer debt, if you include the 20 percent of households with no debt, that average goes down to $27,000.
“Furthermore if you look at where households with debt did build up that debt in the recent past, the biggest part of that was for buying homes, and, of course, we had the housing boom. And in some sense you could argue people were taking advantage of that housing boom, thinking housing prices would continue to go up and up and up.
“And then finally regarding credit card debt: Over half — over half — of households have no credit card debt because they pay their monthly bill in full.”