We all know that the U.S economy is inflated and is dependent on the crushing consumer debts. This would have a crushing effect on the economy. Experts suggest that this year could be the tipping point for the consumer sector that is fuelled by home equity loans, adjustable rate mortgages and credit cards.



The think tank of the United States, Center for American Progress found that the debt burden of a typical middle income US family has grown by 33.1 % between 2001 and 2004. This figure is indicative even after taking into account the inflation. Another thing of concern is that during this period debt percentage relative to income during this period rose even more and also there is a rise in the number of bankruptcies among such households. The reason for this worsening state of the middle class can be attributed to the discrepancy between income and expenditure. The growth in income has not been able to keep pace with the expenditure.