For years, doomsayers warned that consumers' building burden of debt would weigh down the economy. For years, they were wrong. Growing employment, rising home prices, and expanding stock portfolios helped America's households get even more credit.

Well, the threat posed by the debt has finally become a real danger. And that poses yet another challenge for George W. Bush as he steps up to the big job. The credit expansion that blessed the economy and Bill Clinton with additional consumer spending in the 1990s may now come back to haunt Bush if it helps spur a recession. That could happen as the cushion of stock market wealth thins, job losses mount, and real estate markets cool.

Borrowers are more leveraged and vulnerable than anytime since the 1990-91 recession. The savings rate is in decline. And more lower-income people, who were never offered credit before, are piling up debt. The most telling increase in leverage is in the home. In 1990, mortgages amounted to about 35% of the value of houses. That percentage is now nearly 50%.

REFINANCINGS. The worsening ratio has come even as housing prices have soared. Consumers have been taking money out of their houses--whether for home improvements, vacations, or repayment of other debt. Lower interest rates that prompted people to refinance for lower monthly payments have also encouraged them to risk borrowing more, rather than reducing their mortgage debt. More than 80% of refinancings in the first nine months of 2000 resulted in at least 5% bigger mortgages, notes bank analyst Charles Peabody of Mitchell Securities.

Leasing cars and taking out second mortgages have also helped drive up debts faster than incomes. Total consumer debt was 34.1% of income in 2000, up from 28.2% in 1990, estimates Diane C. Swonk, Bank One Corp. chief economist. Consequently, the Federal Reserve estimates debt-service payments, excluding home-equity loans and car leases, were 13.7% of disposable income in the second quarter of 2000, the most recent reading, and the highest since late 1987.

Another force behind the debt buildup is the credit-card industry. To replace revenue lost in crackdowns on nuisance fees, the industry increased solicitations and credit lines. Now, consumers have about $2.4 trillion of unused credit lines on their charge cards, five times current balances. It wouldn't be surprising if borrowing on those lines rises even as consumer confidence falls. People with no other way to pay a mortgage will draw on their cards before risking their homes.

Meanwhile, lenders keep looking for growth among higher-risk borrowers. From 1989 to 1998, when the Fed did its latest survey of consumer finances, the percentage of families facing payments of more than 40% of income increased most sharply among the elderly and families with annual incomes of less than $50,000. Nearly 14% of families with incomes of $25,000 to $49,999 were trying to make payments of more than 40% of income, up from 9.1% in 1989. Only 5.7% of families with incomes of $50,000 to $99,999 were in so deep.

So far, delinquency rates have not begun to climb significantly. But lenders are steeling themselves for higher losses. Bank One, for instance, just saw its nonperforming consumer loans rise 27%.

For a real indicator of what may come, watch home prices. If they fall, they'll thwart refinancings to stretch out house payments or pay other debts. Then it will be like the early 1990s all over again: families in Southern California and in the Northeast who were mired in debt, but couldn't sell their houses for enough to pay off their mortgages.

Those caught in the downdraft of the early '90s eventually dug themselves out from under all that debt. The problem now is that all the good times in recent years have put consumers right back in the hole.

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