Record Household Debt Bears Watching

[jeffrey]

Federal Reserve Chairman Alan Greenspan said Tuesday that rising household debt and surging home prices were cause for attention, but not undue alarm, terming most Americans' finances in "reasonably good shape."

"A significant decline in consumer incomes or house prices could quickly alter the outlook. Nonetheless, both scenarios appear unlikely in the quarters immediately ahead," Greenspan told a convention of community bankers.

But the central bank chief said elevated rates of personal bankruptcy indicated "pockets of distress" in the economy.

Greenspan added that renters are carrying higher levels of debt, including credit card debt, car and student loans. Should that trend persist, it could be harder for renters to become financially set. He also said some local housing markets could be overvalued... [read more at usatoday.com]