Is Debt Consolidation or Spending More on Consumers’ Minds? |

Are consumers ready to spend again, or are they more worried about a possible future of debt consolidation loans to comfortably open their wallets? Not surprisingly, this is a question that divides not just regular folk, but the people who are paid to analyze such matters. In fact, two of the country’s most important economic figures recently offered differing opinions on the matter in the same news story. It’s just one more indication of how little anyone really knows about today’s fragile – too fragile for most – economic recovery.

Differing Views
A recent story by BusinessWeek quoted Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, as saying that consumer spending has reached the “moderately strong” level. He predicts that consumer spending along with business investment will help boost the country’s sluggish economic recovery. However, the same BusinessWeek story references quotes from Richard Fisher, president of the Dallas Federal Reserve Bank. Fisher said that U.S. households were being cautious with their spending. And that, he says, is one reason why consumer spending will probably slow down in the second half of the year.

Who’s Right?
So, who’s right? It’s pretty easy to side with Fisher, if only because the economy still has so many negatives attached to it. Housing values remain low, falling to 2001 levels. Unemployment remains stuck near 10 percent. Foreclosures and bankruptcy filings are both at uncomfortably high levels. It’s easy to understand why consumers would be frugal with their dollars today. Many of them are worried about losing their jobs. Many others are wondering whether they will need to sign up with a debt consolidation service. When you’re contemplating ways to tackle bad debt consolidation, you’re probably not thinking about buying a new computer or flat-screen TV. When you’re wondering which debt consolidation program to sign up with, the odds are good that you’re not sinking hundreds of dollars into a new living room furniture set.

A Shaky Future?
All indicators point to a shaky near-term economic future. Consumers will undoubtedly struggle to navigate this tough economy. Many, overwhelmed by their soaring levels of debt, will turn to debt consolidation loans to get through this rough patch. Hopefully, these consumers will work with a debt consolidation service that treats them fairly. It’s up to consumers to request in writing a list of these companies’ fees and interest rates. If consumers don’t first do this research, they will increase their odds of paying exorbitant interest rates and origination fees for their debt consolidation loans. And this, of course, will only further weaken their financial health.