Recent data from FICO Inc shows that the average American’s balance sheet is continuing to deteriorate. As the debt binge of the last decade has imploded the average credit score has plummeted:
“Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.
Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.”
But hey, at least we always have a means to purchase Apple’s next product that you almost certainly won’t need. And let’s not forget, this is all part of the great banking profit machine so don’t think of it as a weakening consumer – think of it as a stronger banking system. Our money becomes their money, the US economy recovers, etc, etc. After all, isn’t that basically what regulation, monetary policy, and fiscal policy have been geared towards anyhow? Everyone’s a winner! Or so the Bernanke trickle down theory goes….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.