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By Mike Caggeso
Credit defaults have overtaken terrorism as the U.S. economy’s Public Enemy No. 1, a
The National Association of Business Economics, a Washington-based association, surveyed 258 NABE panel members in the survey: Of that total, 32% cited loan defaults and excessive debt as their biggest short-term concern, a response that also topped energy prices, inflation and government spending as causes for worry.
“Financial market turmoil has shifted the focus away from terrorism and toward subprime [mortgage issues] and other credit problems as the most important near-term threats to the U.S. economy,” Carl Tannenbaum, NABE President and Chief Economist, La Salle Bank/ABN-AMRO (NYSE: ABN) said in the report. “However, these concerns appear to be somewhat transitory, as the five-year outlook for housing remains positive.”
When this survey was last conducted in March, 35% of respondents cited national security/terrorism as their chief worry. The report issued this week is the first one in which terrorism worries cooled – and not just a little, since it dropped 15 percentage points to settle at 20%.
However, such a statistical drop in terrorism fears should be viewed within its context. This is the first time “subprime default and debt problems” were added to the survey’s list – as were “excessive household/corporate debt.”
What’s more, these categories were added just as what began as a slowdown in the long-scorching U.S. housing market morphed into a global credit contagion that has some analysts talking of an international slowdown – if not a worldwide recession.
The list of long-term challenges to the nation’s economy, however, is topped by health care (24%) and the growth of the elderly population (21%). Those items were followed by the education system (17%), the federal deficit (13%), energy issues (9%) and competitiveness (6%).
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