Depending on the recovery cycle, recent natural disasters could significantly exacerbate people’s financial problems – especially for those who are already struggling with debt.
San Mateo, Calif. (PRWEB)
September 21, 2017
The current economic outlook for U.S. consumers is in flux because despite the relatively stable economy, the nation is facing multiple disaster recovery efforts, according to the Freedom Debt Relief Quarterly Comment on consumer debt and credit issues.
The positive news is that U.S. employment has remained strong for several years. Some economists expect the U.S. unemployment rate to hit 4.2 percent, its lowest point since 2001, within 12 months. In the wake of Hurricanes Harvey and Irma, however, this low unemployment rate could contribute to a slow recovery
Unemployment Rate Impacts Recovery Efforts
“The recovery picture will be complex, and different in each of the affected regions, but one common risk is that tight labor markets could slow the effort to rebuild homes, roads and businesses,” says Sean Fox, co-president of Freedom Debt Relief. “Depending on the recovery cycle, these disasters could significantly exacerbate people’s financial problems – especially for those who are already struggling with debt.”
People who live in areas where they cannot easily rebuild could face deteriorating conditions, lost jobs, medical bills and other escalating problems, Fox says. In Texas, the unemployment rate has been just over 5 percent, even with a slowdown in the energy economy that resulted in thousands of lost jobs. Florida’s labor market is even tighter, with about 4 percent unemployment.
Rising Cost of Debt
Additionally, most economic observers anticipate that the Federal Reserve will raise its key federal funds rate again before the end of 2017. Interest rates on credit cards and HELOCs (home equity lines of credit) have increased by 0.5 percent in 2017.
“These rate hikes mean debt becomes increasingly expensive. When people who cannot repay what they owe, their credit scores decline, which raises the price of future credit, such as car loans and mortgages,” Fox explains. “These challenges make it even more important for people to eliminate and avoid going…