Increased debt and falling home prices are hurting household finances and threatening the health of the nation's economy, according to a report from Moody's Economy.com.
"The mounting losses on household debt are straining financial institutions and will keep the economy struggling to grow for the remainder of this year and well into 2009," Mark Zandi, the chief economist at the Moody's Corp. unit, said Wednesday.
Household credit conditions will continue weakening most of the rest of this decade, and another 5 million homeowners will be at significant risk of default during that time, the report said.
Credit card receivables are rising at nearly a double-digit rate as homeowners unable to borrow against their homes are using cards for cash, Economy.com said. Receivables are rising almost 15% in California, 20% in Florida, and 30% in Nevada.