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Economists disagree on meaning of overwhelming debt in Texas

Economics is not an exact science and many times economic data can be interpreted to mean a variety of different things. This is why economists will debate with each other vehemently regarding the meaning behind the numbers concerning consumer credit card use in Texas and other states. Some believe overwhelming debt weakens the economy, while others believe debt to be a sign of improved consumer confidence.

Those who tend to look at credit card debt as a sign of consumer confidence argue that reasonable amounts of personal debt means that consumers are more confident in their financial situations. Also, almost 70 percent of the American economy is powered by consumer spending. Usually, high consumer confidence and spending are considered positive signs for the overall economy.

Alternatively, some economists argue that consumers taking on more debt than they can afford is detrimental to personal finances. This results in an overall negative impact on the economy as a whole, since a person who is overwhelmed by debt is spending beyond his or her means. Some economists believe that when a consumer spends the money it is benefiting the economy; however, in the long run it prevents real economic growth as a consumer is only working to service the debt and no longer creating anything of value.

On the other hand, for the Texas consumer facing overwhelming debt, he or she is probably not worried about the economy as a whole. This person is more than likely trying to find a way to dig out of the financial hole caused by taking on too much debt. Many times, this may not be that easy, which means that such a consumer may have to file bankruptcy. But, on the bright side, this will allow the person to start with a clean financial slate for the next chapter of life.

Source: Wall St. Cheat Sheet, Going Debt Crazy: What the Financial Crisis Did to Credit in the U.S., Dan Ritter, Feb. 11, 2014

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