High Consumer Debt Load Adds to Concern About the Economy.(Brief Article)

While the chief economist at Standard & Poor's expects the U.S. to avoid an outright recession, the economic slowdown will make it difficult for some consumers to pay their record debt burdens.

As firms lay off employees, lenders will see an increase in consumers who have trouble paying their mortgages, auto loans and credit card bills, S&P said.

Weak consumer confidence and erosion of stock market wealth will diminish consumer spending, dampening economic growth through the first six months of this year, Mr. Wyss wrote in a report about consumer credit problems. He notes that making economic projects is inherently difficult.

"Standard & Poor's expects the economy to avoid a recession, but not by much."

The unemployment rate is expected to rise above 5% by early 2002, S&P said.

Meanwhile, household debt continues to hit new records. The average American household now owes 107% of its annual income. Most of the recent increase in debt has been from mortgage loans.

One reason for the growth in mortgage debt is the wealth created by stock market gains, which have fueled decisions to make trade-up home purchases for some ...