Last year's holiday spending surge is looking more and more like an abberation, according to economist Allen Sinai.
The American Express Consumer Debt Index, which Mr. Sinai introduced earlier this year, fell for the second straight quarter in the period ending June 30, reflecting continued belt-tightening by Americans.
Holiday Upturn
The index had ticked up in the fourth quarter, as consumers loaded holiday purchases onto their credit cards.
Mr. Sinai is chief executive of Economic Advisers' Inc., the affiliate of Lehman Brothers that produces the index.
The index of eight measures of consumer indebtedness stood at 216 on June 30, 20% below its peak in the second quarter of 1992, but still 26 above its low point near the start of the 1980s economic expansion.
Signs of Health
Although a failing index indicates a declining appetite for credit, it also indicates a healing process in the marketplace, Mr. Sinai said.
"The creditworthiness of households is steadily improving.
"The risk of loan losses and delinquencies is becoming less and less."
But he estimated it may be two and a half years before consumers are ready to take on, enough new debt to fuel a strong economic expansion.
