Historical Perspective
In the twentieth century, spending on consumer durables rose significantly. Household debt rose as living standards rose, as consumers demanded an array of durable goods (commodities). This included major durables like high-end electronics, vehicles, and appliances, that were purchased with credit. Easy credit encouraged a shift from saving to spending.
Households in developed countries significantly increased their household debt relative to their disposable income and GDP during the 1980-2007 period, one of the many factors behind the U.S. and European crises of 2007-2012.
U.S. households made significant progress in deleveraging (reducing debt) post-crisis, much of it due to foreclosures and financial institution debt write-downs. By some measures, consumers began to add certain types of debt again in 2012, a sign that the economy may be improving as this borrowing supports consumption.
Read more about this topic: Household Debt
Famous quotes containing the words historical perspective, historical and/or perspective:
“Reason, progress, unselfishness, a wide historical perspective, expansiveness, generosity, enlightened self-interest. I had heard it all my life, and it filled me with despair.”
—Katherine Tait (b. 1923)
“Nature never rhymes her children, nor makes two men alike. When we see a great man, we fancy a resemblance to some historical person, and predict the sequel of his character and fortune, a result which he is sure to disappoint. None will ever solve the problem of his character according to our prejudice, but only in his high unprecedented way.”
—Ralph Waldo Emerson (1803–1882)
“Egoism is the law of perspective as it applies to feelings, according to which what is closest to us appears to be large and weighty, while size and weight decrease with our distance from things.”
—Friedrich Nietzsche (1844–1900)