Fox Business Network
Fox Business Network 26 Dec 2019

Recession concerns persist as household debt nears $16 trillion

Description:

Center for Freedom and Prosperity co-founder Dan Mitchell discusses household debt concerns and the state of the market.


Lockdown loosening measures for England are in place from today despite criticIsms that the rules remain confusing and may endanger the lower-paid. It comes as the UK Chancellor of the Exchequer extends the furlough scheme until October. …
As the number of coronavirus related deaths near 100,000 in the U.S., the president continues to direct states to reopen as soon as possible. Aired on 05/26/2020.
Prime Minister Justin Trudeau said Canadians can expect more financial aid benefits rolling out soon.
The panel discusses how President Trump is spending his Memorial Day weekend, which includes golfing in Virginia and spending time on Twitter attacking opponents. Aired on 05/25/2020.

… show captions ↓
CONNELL: ALREADY AT THAT LEVEL.
THANK YOU.
JACKIE DEANGELIS.
DOES THE U.S. HAVE A LOOMING
DEBT CRISIS TO DEAL WITH?
HOUSEHOLD DEBT IS UP TO
$15.99 TRILLION.
NOT QUITE 16, RIGHT?
BUT THE GOOD NEWS THERE, IS THAT
PEOPLE ACTUALLY ARE PAYING IT
BACK, AS MUCH DEBT AS WE HAVE.
CORPORATE DEBT IS ANOTHER ISSUE
WHICH WE TALK ABOUT.
CENTER FOR FREEDOM, PROSPERITY,
DAN MITCHELL JOINS US.
ON HOUSEHOLD SIDE, DAN, START
THERE.
WHAT WOULD YOU SAY ABOUT THAT,
ABOUT THAT NUMBER?
WE HAD A GUEST EARLIER SAYING,
CONSUMER AND AMERICAN CONSUMER
IS IN PRETTY GOOD SHAPE, ABLE TO
PAY BACK A LOT OF WHAT THEY
BORROW.
NOT IN SUCH DIRE STRAITS.
WHAT DO YOU MAKE OF THE NUMBER,
ALMOST 16 TRILLION?
>> SOUNDS LIKE A HUGE NUMBER.
IT'S A HUGE NUMBER BUT HERE ARE
TWO RATIOS EVERYONE NEEDS TO
KEEP IN MIND.
DON'T JUST LOOK AT HOUSEHOLD
DEBT.
ALSO LOOK AT HOUSEHOLD ASSETS.
HOUSEHOLD ASSETS ARE INCREASING
AT THE SAME TIME DEBT IS
INCREASING.
SO THEORETICALLY THERE IS NOT A
PROBLEM.
THE OTHER RATIO, WHAT IS
HOUSEHOLD INCOME, VERSUS
HOUSEHOLD DEBT SERVICE AND
COSTS?
YOU MIGHT HAVE LOT OF INTEREST
ON THE DEBT, MONEY THAT YOU OWE.
IF YOU HAVE ENOUGH INCOME COMING
IN, THAT'S FINE.
RIGHT NOW WITH THE ECONOMY
STRONG THESE NUMBERS, THESE
RATIOS ARE OKAY.
BUT HERE IS THE THING WE ALWAYS
HAVE TO WORRY ABOUT?
WHAT IF SAY, THERE IS A BUBBLE?
WHAT IF WE GO INTO RECESSION?
WHAT IF ASSET VALUES FALL?
HOUSEHOLD INCOME FALLS THAT THE
INTEREST EXPENSE BECOMES BIG?
THOSE ARE THINGS WE NEED TO BE
CONCERNED ABOUT.
CONNELL: WE COMPARE TO THE
NASDAQ 5000 DAYS, OR NASDAQ
SETTING RECORDS NOT SEEN SINCE
'97, '98.
BACK THEN WE DIDN'T KNOW, NOT A
LOT OF PEOPLE KNEW THAT THE
BUBBLES THAT WERE RECALL TOKING
WERE FORMING.
OR YOU COULD SAY THE SAME ABOUT
2006 UNTIL EVERYTHING WENT
HAYWIRE IN 2008.
IS THERE ANYTHING OUT THERE THAT
DOES WORRY YOU?
I BROUGHT UP CORPORATE DEBT FOR
EXAMPLE, THAT SOME PEOPLE ARE
STARTING TO BE CONCERNED ABOUT
THAT?
>> TWO THINGS I'M PERSONALLY
CONCERNED ABOUT.
NUMBER ONE IS SORT OF CYCLICAL.
ALL THE ARTIFICIALLY LOW
INTEREST RATES FROM THE FEDERAL
RESERVE, OTHER CENTRAL BANKS
AROUND THE WORLD, PUSHING TOO
MUCH LIQUIDITY INTO THE SYSTEM.
THAT CONCERNS ME THAT ENCOURAGED
PEOPLE TO TAKE ON TOO MUCH DEBT.
THE SECOND THING, IS MORE
STRUCTURAL LONG RUN.
THANKS TO FEDERAL GOVERNMENT
POLICIES, WE SUBSIDIZED
BORROWING AND WE PENALIZED
SAVINGS.
IN THE LONG RUN THAT JUST, YOU
KNOW, WE WANT THOSE DECISIONS TO
BE MADE ORGANICALLY UNDER,
UNDERGIRDING GENUINE ECONOMIC
NEEDS IN THE ECONOMY.
WE DON'T WANT UNCLE SAM WITH
FINGER ON THE SCALE, ENCOURAGING
US TO BORROW TOO MUCH AND
PUNISHING US TO SAVE.
CONNELL: WE DON'T SEE ANYTHING
ON THE HORIZON CHANGING THAT
DYNAMIC, RIGHT?
SOUNDS LIKE THE WAY YOU LOOK AT
THINGS, SHORT TERM, WE'RE OKAY,
THAT ECONOMY IS STRONG, CONSUMER
IS STRONG.
PEOPLE ARE IN A PRETTY GOOD
SPOT.
JUST OVER TIME THESE CONCERNS,
OBVIOUSLY.
JUST A MATTER OF WHEN.
WE DON'T KNOW WHEN THAT WHEN
WILL BE, RIGHT?
>> WELL, THERE IS A LITTLE BIT
OF GOOD NEWS.
CONNELL: OKAY.
>> TRUMP'S TAX REFORM IN 2017
SLIGHTLY REDUCED THE SUBSIDY FOR
BORROWING BY COMPANIES.
SO HOPEFULLY, IN THE FUTURE,
THERE WON'T BE AS MUCH CORPORATE
DEBT AS OTHERWISE WOULD BE.
BUT BEYOND THAT, YES, THE
ECONOMY RIGHT NOW IS STRONG.
THE PROBLEM IS, IS THIS SAY 1984
WHERE WE HAVE SEVERAL YEARS OF
GOOD STRONG GROWTH?
OR IS IT 2007 WHEN WE'RE ON THE
CUSP OF A BUBBLE BURSTING OR
SOMETHING LIKE THAT?
CONNELL: YES.
>> AND FRANKLY ECONOMISTS LIKE
ME WERE LOUSY FORECASTERS.
IF I KNEW THE ANSWER TO THAT I
WOULD BE RICH.
CONNELL: WHAT DO YOU LOOK AT?
WHAT SIGNS EARLY NEXT YEAR WOULD
BE, A GOOD SIGN, SAY, HEY, THIS
COULD CONTINUE FOR A WHILE
VERSUS IF X, Y, Z, POPS UP YOU
START TO BE WORRIED?
WHAT ARE YOU LOOKING FOR FIRST
HALF OF NEXT YEAR AS AN
INDICATOR AT LEAST?
>> A LOT OF PEOPLE FOCUS ON THE
STOCK MARKET.
THAT IS SUPPOSED TO BE A
REFLECTION OF THE FUTURE
PROFITABILITY OF COMPANIES.
WELL, YEAH, BUT IS IT A, IS IT
AN INDICATOR THAT ANY OF US ARE
VERY GOOD READING?
IS SOMETHING A TEMPORARY BLIP OR
GENUINE CORRECTION?
AGAIN, I DON'T PRETEND THAT I
KNOW ANSWERS TO THAT.
I FOCUS ON GOVERNMENT POLICY I
WORRY ABOUT THINGS LIKE FEDERAL
RESERVE KEEPING INTEREST RATES
TOO LOW.
I WORRY ABOUT TRUMP DOING
SOMETHING SILLY ON TRADE WITH
CHINA, THINGS LIKE THAT.
BUT BEYOND THAT PREDICTING THE
ECONOMY IS A FOOL'S GAME OR AT
LEAST IT IS FOR ME.
CONNELL: WHAT ABOUT THE
ELECTION, IN TERMS OF PRICING
OUT WHO IS THE LEADING CANDIDATE
ON THE DEMOCRATIC SIDE, MIGHT BE
PRESIDENT'S OPPONENT?
A MONTH AGO, FOR EXAMPLE, SEEMED
ECONOMISTS OR INVESTORS WERE
SAYING WE'RE STARTING TO WORRY
ABOUT ELIZABETH WARREN CANDIDACY
OR PRESIDENCY?
THAT SEEMED TO FADED AS HER
STOCK FADE AD BIT IN THE EARLY
STATES.
DO YOU START TO LOOK AT THAT
MIDWAY THROUGH THE YEAR, FIGURE
OUT WHAT POLICIES MIGHT RESULT,
YOU KNOW, IF TRUMP DOESN'T WIN?
>> IT'S A GREAT QUESTION BECAUSE
RIGHT NOW THE MACROECONOMIC
POLITICAL FORECASTING MODELS AND
FOR THAT MATTER, JUST MARKET
SENTIMENT ON THE STREET SUGGESTS
PEOPLE THINK TRUMP WILL WIN,
THEREFORE WE WILL HAVE
CONTINUATION.
SO PEOPLE AREN'T AS WORRIED
ABOUT SOME OF THE REALLY RADICAL
POLICIES OF ELIZABETH WARREN OR
BERNIE SANDERS.
OR MAYBE, MAYBE THEY THINK THOSE
TWO DON'T HAVE A CHANCE GETTING
THE DEMOCRATIC NOMINATION AND
THEY'RE LOOKING AT JOE BIDEN,
WHILE ON THE LEFT IS NOT
CONSIDERED TO BE A CRAZED,
HARDCORE ANTI-FREE ENTERPRISE
POLITICIAN, SO, AGAIN, IF YOU
KNEW THE ANSWERS TO ALL THESE
QUESTIONS, HAD POLITICAL BETTING
MARKETS YOU WOULD HAVE A MUCH
BETTER SENSE OF THIS.
CONNELL: RIGHT.
>> RIGHT NOW ALL WE CAN DO IS
LOOK AND WONDER, IS THERE GOING
TO BE SOME POLITICAL BOMBSHELL
IN 2020?
WILL TRUMP SEND OUT A TWEET THAT
UP ENEVERYTHING?
THAT COULD BE BOTH POLITICAL AND
ECONOMIC.
NO WAY PREDICTING THAT.
CONNELL: AS WE LEARNED IN THE
NEW CYCLE.
FORGET 24 HOURS.

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