Debt keeps Americans stressed out

May 30, 2010 at 12:00a.m.

Associated Press

WASHINGTON

The economy trudges ahead, yet debt dogs many Americans, stressing them out even as they firm up their own financial foundations.

There are new jobs produced but old worries persisting for people despite belt-tightening and boosted savings, according to an Associated Press-GfK poll.

About 46 percent of those surveyed say they’re suffering from debt-related stress, and half of that group described their stress as “great deal” or “quite a bit.” On the other hand, about 53 percent say they feel little or no stress at all.

That’s in line with findings from last year, even though times seem better today: The economy is growing and generating jobs, and households have made progress in repairing their financial footing, trimming debt, watching spending and saving more.

It’s a big turnaround from a year ago — a shrinking economy, jobs jettisoned as businesses struggled to survive the deepest recession since the 1930s.

So why aren’t the stressed — and the not-so-stressed — feeling better?

For starters, it just doesn’t feel much like a recovery to many people. Unemployment is stubbornly high — 9.9 percent. The jobless face fierce competition for work. Those with a job are watching their paychecks shrink.

A growing number of people are at risk of falling into foreclosure, and only those with the most stellar credit probably can get a new loan. AP-GfK polls show that only 20 percent say the economy is good, compared with 15 percent last year.

Cynthia Bryant, 73, feels stress from her bills — much of that heartburn related to medical expenses.

“I need a different car. I can’t afford it. I have to watch every penny that comes in,” says Bryant, who worked as a purchasing agent for a computer company before she retired. Bryant, who lives in a Denver suburb, gets by on a fixed income that hasn’t budged, although her expenses — rent, groceries and other basics — have risen.

Ken Goldstein, economist at the Conference Board, a research group that keeps close tabs on consumers, says it’s people’s individual circumstances — more so than their sentiment about the economy — that shape their confidence and their stress over debt. “It’s about what happens to me — my house, my car, my job,” he says.

People are whittling their debt.

The average amount owed on credit cards is $3,900, the poll said. That’s down from $5,600 in the fall and $4,900 last spring.

Families with incomes over $50,000 have sliced their credit card debt by more than half, yet their stress from debt hasn’t changed much — it’s moderately low. Families with incomes under $50,000, however, have added only slightly to their debt, while their stress level rose sharply.

Goldstein says human nature can factor into people’s feelings of debt-related stress.

More broadly, people are cutting their debt at the fastest rate in more than six decades, according to the Federal Reserve. People defaulting on mortgages and other loans factor into the reduction, economists point out.

Household debt fell 1.7 per- cent last year to $13.5 trillion, according to the Fed. It was the first annual drop, based on records going back to 1945.

People on average carry around $44,000 in debt — mortgages, credit cards, auto loans and other consumer debt. That’s a far bigger load than in the early 1980s, when unemployment topped 10 percent. In 1982, per capita debt totaled about $14,000 in today’s dollars.

At the same time, people are building up their savings — 4.2 percent of their disposable income last year, the most since 1998, the Commerce Department says.

Paul J. Lavrakas, a research psychologist and AP consultant who analyzed the AP-GfK survey, finds that among those with the most stress from debt are women, married couples, people age 30-44, and the poor — households with incomes less than $20,000.

Those with the least debt stress include men, retired people, single people, those 60 and older, and the wealthy — households with incomes greater than $100,000, he says.