Old Debt Called Brake on Sales
GLENVIEW, Ill. - The overhang of consumer debt will be the biggest factor in keeping consumer spending - and hence the economy - sluggish through Christmas, according to the head of a leading debt-collection agency.
"Based on increased collections claims we and our industry are handling, people simply don't have any discretionary income today," said Les Kirschbaum, president of Mid-Continent Agencies Inc., Glenview, Ill.
"Frankly, many Americans haven't even paid last year's Christmas bills," Mr. Kirschbaum said. "Between 80% and 90% of net income already is owed for debts."
The holiday season usually boosts the collections business by 30%, the executive said, because consumers buy what they cannot afford.
"Misuse of credit cards during the holidays often creates significant financial burdens long after the season," Mr. Kirschbaum said.