We are projecting that the US economy will sag next year followed by years of opportunity. The American household is one reason for the positive outlook post 2014. The Federal Reserve Board (FRB) is reporting that household net worth is currently at a record high $70.3 trillion. We are wealthier than ever.
Consumer borrowing is up, but there is no threat from burgeoning consumer debt, at least not yet. The FRB reports that the ratio of consumer debt to income is the lowest in 33 years. The American Bankers Association tells us that bank card delinquencies have dropped to 2.41 percent, the lowest in 23 years. That means the American consumer is credit worthy and can power the economy forward.
Credit standards for home mortgages and car loans are currently easing; take advantage of the opportunities while you can. For 2014, the Dodd-Frank legislation will have a chilling impact on bank lending next year as reserve requirements change. Additionally, the increased regulatory environment also means that lending costs (fee, rates) are also likely to go up next year. We will adjust, consumers will do their thing, and the economy will be lifted higher post 2014.