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New household debt numbers from Fed tell a mixed tale of hope, woe

The adage "statistics don't lie" impliedly includes an addendum along the lines of, "They can also often be interpreted multiple ways and reasonably point toward disparate conclusions."

Nowhere can that be seen more clearly than in data released recently by the Federal Reserve Bank relating to household debt across the country, including in Florida.

On the one hand, the numbers arguably signify a "things are slowly getting better for most people" conclusion. On the other hand, though, and decidedly, they just as easily infer that many people across the nation continue to be wary of -- even scared by -- their personal financial situations and are acting with great care to simply avoid foreclosure on their homes and slipping into bankruptcy.

What federal bank officers note most centrally is that American households are trying to cut back on and minimize their debt. Many people are clearly attempting to take control over mortgage debt, with numbers reflecting the lowest level of such debt in six years.

However, and notwithstanding that decline, more than 240,000 Americans experienced home foreclosure in the third quarter of 2012, a number that continues to be startlingly high. As we have noted in prior blog posts, an outsized percentage of those persons are Florida residents.

"Financial conditions are still really tight for a whole lot of households," comments Karen Dynan, co-director of a program at the Brookings Institution, a nonprofit organization focusing on economic research and policy solutions.

Tellingly, too, much of debt reduction that has occurred since mid-2008 and the financial crisis has owed to foreclosures and charge-offs in credit cards.

Source: Washington Post, "Americans continued paring household debt in third quarter," Danielle Douglas, Nov. 27, 2012

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