GLOBAL FINANCIAL CRISIS TWO? Fears US economy will spark worldwide economic meltdown

Monday, August 1, 2016
By Paul Martin

AMERICA’S economy is slowing while debt levels soar, in a scenario that has worrying similarities to the lead up to the financial crisis that brought the world to its knees.

Mon, Aug 1, 2016

The US economy grew far less than expected in the second quarter of 2016 taking the annualised rate to just 1.2 per cent – below expectations of 2.5 per cent.

At the same time, credit card and overdraft lending has soared to its highest level since 2007.

In just three months around $18bilion (£14bn) of credit card debts have been issued data showed, prompting fears lenders could soon find themselves swamped with loans that could go bad if the economy continues to deteriorate.

Nancy Bush, banking analyst at NAB research told the Financial Times: “In the present environment it’s probably a safe strategy, but as we saw with housing in 2007-08 that environment can change very rapidly‚Ķ they need to be very careful.”

In June the US shocked with the worst set of job figures since the recovery out of the financial crisis.

The figure recovered in July, some experts believe the US is on course for another recession- and this would again have a devastating impact on the rest of the world.

James Garrick, economist for Legal and General Investment Management (LGIM) recently said the firm had started to reduce risk in the US amid “signs that things are going wrong”.

He issued a similar warning over the American economy in December 2007 and sees similarities between conditions then and now.

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