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Consumer debt and recessions

Does the availability of easy credit soften the impact of recessions? Seems like a logical hypothesis. Via Marginal Revolution.

1 acm // Mar 22, 2007 at 9:36 am

could be argued either way, I think — a little credit could see you through a tight patch, or it could help you dig a deeper hole. depends on how your luck turns…
2 Jeff // Mar 22, 2007 at 9:50 am

I think it could be argued either way as well. While the availability of relatively easy credit for home purchase/improvements and for student loans is a good thing, the opposite could be said of easy credit for consumer debt. While I enjoy my one month loans from Discover in which they pay me 1%, those that carry significant debt month to month on their credit cards are not in good shape.

In addition, the easy credit for houses is ALWAYS a good thing. The Charlotte Observer is running a series on a bunch of low income neighborhoods that have gotten screwed due to cheap builders and sub-prime lenders. http://www.charlotte.com/171/story/57094.html