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U.S. consumers' changing attitudes toward credit are contributing to the national credit crisis and the troubled economy, says Dr. Robert Manning, director of the Center for Consumer Financial Services at the Rochester Institute of Technology. Manning was the keynote speaker last night at SourceMedia's Financial Services Collections Conference in Las Vegas. Since World War II, consumers have developed a sense of entitlement to credit, whether it is credit cards or mortgages, and they have placed less importance on personal savings. "The American consumer has now essentially painted himself into a corner because the lifelines of consumer credit are not there," he says. A major issue of the consumer financial meltdown is individual versus institutional responsibility. "[There is] the assumption of consumers that they can afford the line of credit they've been offered because the credit grantor has issued it versus the assumption of lenders themselves saying, 'It's an individual's responsibility. They should know when they've crossed the line and can't afford to repay their debts,'" he says. Consumers' changing attitudes regarding personal savings further compound their financial woes. For example, Manning said, national personal savings as a percentage of disposable income peaked during World War II at 26%. The average personal savings rate in the post-WWII era is 8%. Currently, it is below 1%.
