Drowning In Debt

Interesting report from the Center for American Progress:

Drowning in Debt

America’s Middle Class Falls Deeper in Debt as Income Growth Slows and Costs Climb

"America’s middle class is drowning in debt. A typical middle income family earning around $45,000 a year saw its debt burden grow by 33.1 percent between 2000 and 2004, even after adjusting for inflation. Debt relative to income rose even more, to 33.9 percent, during this period for middle income families, according to the Federal Reserve Board’s tri-annual Survey of Consumer Finances. Personal bankruptcies among these households are rising steeply."

"The reasons for greater economic distress among middle class households are not hard to pinpoint. Slow income growth between 2001 and 2004, the last year for which complete data is available, has not kept pace with the rising cost of big ticket items such as housing and education loans, medical expenses and transportation. Family budgets have been squeezed."

"A common but misplaced assumption is that the growth in debt among middle-income families – those with incomes roughly between $25,000-to-$70,000 a year - is the result of over-consumption through increased credit card debt. Rather, growth in debt is primarily due to heavier borrowing for investments in homes or education, both of which saw dramatic price increases in recent years. The cost of a college education, for example, grew by 26.3 percent between 2001 and 2004, after adjusting for inflation."