The American economy is teetering and potentially headed toward a collapse that will be worse than the Great Depression, experts are warning.
As the total amount of household debt climbs to $21 trillion and continues to grow, a crisis is looming that could shatter the current economic recovery, the global research firm Elliott Wave International is warning. When combined with a global debt of $247 trillion, the conditions are ripe for an economic collapse, the firm warned in a note to investors.
“We think the major economies are on the cusp of this turning into the worst recession we have seen in 10 years,” wrote Murray Gunn, head of global research at Elliott Wave International (via the New York Post ).
“Should the [US] economy start to shrink, and our analysis suggests that it will, the high nominal levels of debt will instantly become a very big issue.”
This downturn could be historic.
“We won’t be able to call it a recession, it’s going to be worse than the Great Depression,” economic commentator Peter Schiff told the New York Post . “The U.S. economy is in so much worse shape than it was a decade ago.”
The analysis noted that household debt is even higher now than it was in 2008, just as the Great Recession started.
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Others have raised alarm about rising debt, specifically student loan debt. As CNBC noted, despite the record-low unemployment numbers and a strong economy, student loan debt continues to skyrocket and is now at an average of $30,000 at graduation, up from $10,000 in the early 1990s.
“The country’s outstanding student loan balance is projected to swell to $2 trillion by 2022, and experts say a large portion of it is unlikely to ever be repaid; nearly a quarter of student loan borrowers are currently in a state of delinquency or default,” the report noted. “Because of these loans, many Americans are unable to buy houses and cars, start businesses and families, save or invest.”
This has led a number of politicians to push for student loan reform, calling for new programs to lower interest rates and offer ways to forgive loans when certain conditions are met. Experts have warned that without some kind of relief, the “student loan bubble” could burst much like the way mortgage debt did leading up to the Great Recession.
Not all analysts agree with the dreary economic forecast. Mark Bern of Seeking Alpha noted that traditional measures like household debt do not paint an accurate picture, especially when households are borrowing at much lower interest rates today than they did in 2007.
