Holicent
VIP Contributor
To predict the future returns of investments, one must first understand what drives the market. A good place to start is with the yield curve, which shows how short-term interest rates change relative to long-term rates. The shape of this curve is important as it affects not only how much money you can borrow at different times, but also how much interest you can earn on your savings.
The Federal Reserve Bank of St. Louis publishes an annual study called the Survey of Consumer Finances that provides demographic and economic data about Americans' financial situations and credit usage. The survey calculates the average consumer debt rate by looking at how many times people in each age group borrow from various sources, such as banks or credit cards, and dividing this number by their income level. The greater numbers that appear along each line on this graph, the more difficult it becomes for people in those age groups to make regular payments on their debts. Data from other sources shows that when interest rates increase, so does consumer borrowing (the green line). When rates fall, borrowing falls (the red line).
The Federal Reserve Bank of St. Louis publishes an annual study called the Survey of Consumer Finances that provides demographic and economic data about Americans' financial situations and credit usage. The survey calculates the average consumer debt rate by looking at how many times people in each age group borrow from various sources, such as banks or credit cards, and dividing this number by their income level. The greater numbers that appear along each line on this graph, the more difficult it becomes for people in those age groups to make regular payments on their debts. Data from other sources shows that when interest rates increase, so does consumer borrowing (the green line). When rates fall, borrowing falls (the red line).
