Opinion: COVID-19 should have taught us the danger of debt. Did it?
A year ago this week, after meeting with concerned officials at Salt Lake International Airport, I tried to convey the mood of the day:
“As you can see on TV, color-coded maps show which states have declared emergencies and which have died; as you watch the stock market crash like a rubber band; seeing basketball games without fans and hearing about canceled religious services, conventions and trade shows, you may feel like peasants curl up in the face of an advancing hostile army, ” I wrote in a column.
Today this invasion appears to be on his last legs. In Utah, anyone 50 or older is eligible for a vaccine, and state lawmakers have set a random April 10 date to end the mask mandate for all but gatherings of 50 or more people.
It’s almost time to get out of our foxholes and count the damage. It’s time to see how many changes will last. It’s time to write the lessons for next time.
On this point, things don’t look as bad as many had predicted. Utah lawmakers have faced an enviable $ 1.5 billion surplus this year. They cut taxes. The state’s unemployment rate is 3.1%.
Surprisingly, Utah is not alone. From March to December, 20 states saw their public revenues increase. Six – Utah, Vermont, Idaho, South Dakota, Colorado and Alabama – saw them jump more than 3%, according to the wall street journal. Across the country, state revenues fell, but only 1.8% in total.
At the same time, Americans began to save. A survey by bankrate.com in January, 54% of people nationwide reported having more emergency savings than credit card debt. This was 5% more than the previous year and 10% more than in 2019.
Wallethub.com followed with a report this week saying Americans paid off a record $ 82.9 billion in credit card debt in 2020.
Add to that a recent New York Times Report That said, economists are starting to talk about a “supercharged rebound that lowers unemployment, pushes up wages and can foster years of stronger growth,” and things look a lot better than at this meeting I was at. attended a year ago.
This is why I hesitate to throw some caution on all of this. Things may not be quite what they seem.
First, these excellent state budget figures and low unemployment rates were not all the result of great leadership at the state level. The first rounds of federal stimulus, whether through direct checks to individuals or business loans, likely kept things from getting worse, even though they kept some businesses afloat and some tenants in a financial position. House. These are good things, especially if they help fuel a strong recovery, but they come at a cost and the need to the most recent stimulus was not so clear.
Second, the data on positive savings is much stronger in some demographic groups than in others. While it is true that each demographic had more people with savings than credit card debt, the figure was lowest among black respondents and millennials.
Third, we paid off credit card balances, but Wallethub said the average household still owed $ 8,089 on credit cards.
Fourth, while the economy may explode as the pandemic emerges, the nation should not ignore gigantic debt he rang trying to keep him alive. The national debt has topped $ 28 trillion, and that doesn’t include the latest round of stimulus spending.
I have heard learned economists say that it is important to spend deficit during tough times in order to stimulate economic growth. What I don’t hear, especially among politicians, is a detailed plan on how to pay off that debt during the good times.
It is difficult to be the party’s poacher as the country’s economic powerhouse produces pent-up steam and prepares to roll. The past year has been difficult for just about everyone, especially the more than half a million Americans who have perished and the loved ones who mourn them. We need a good time.
That’s probably what people said a century ago coming out of the last great pandemic, and they had it, at least until a certain Tuesday in 1929.
Two days before I met these airport officials a year ago, I was with legislative leaders from the Utah Capitol, talking about a possible tax cut as, around the room, the people were looking at phones, watching the stock market crash in the face of a pandemic. It was a sickening feeling.
If things happen, Americans will have a chance to get smart and pay off their debts, on individual credit cards and in Washington, to make sure history doesn’t keep repeating itself. Are they going?