Mary: This is Mary Walden with economist MW, welcoming you to the economic perspective. Today’s program asks if there’s a looming debt crisis. Mike, so far the impact of the recession and high unemployment rates on the ability of households to make their debt payments. But could that change if lofty jobless rates continue?
Mike: Summary Answer
- Yes, and that’s a worry
- With the economy improving and jobs being added, the current forecast is that about $800 billion of household debt will have to be written off
- This is 50% less than the amount written off during the Great Recession
- But, under a worse-case scenario in which the virus comes back and shutdowns are re-instituted, $3 trillion of household debt would be at risk
- This would be a major crisis for the financial sector
- So, all depends on the virus
- I’m MW
Mary: And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.