Election Section

If it weren’t for the consumer – the courageous, spendthrift, debt-be-damned U.S. consumer – the economy might now be in the midst of recession. 

Instead, while the new electronic economy seemed to vanish and the old industrial economy fell into a now 12-month deterioration, the broad economic numbers have skirted the line between growth and decline. 

But, according to the latest Commerce Department figures, consumers are still spending.  

Personal consumption rose 0.4 percent in June, double expectations, as consumers spent on cars and houses, travel and tickets. 

Making such behavior all the more remarkable are the circumstances in which the consumer performance has been staged. Their assets have shrunk. The jobless rate has risen, albeit slowly. Their debts have mounted. 

Last year, the net worth of American families declined for the first time in decades, partly due to the stock market, partly because homeowners tapped into their home equity for money to pay bills and enjoy life. 

Federal Reserve figures show that the total net worth of households and nonprofit organizations fell last year to $41.4 trillion, more than $840 billion less than at year-end 1999. 

True, home prices rose, giving a boost to homeowner confidence, but so did mortgage debt.  

The homeowner equity to debt ratio fell to 54 percent as of last December, a decline from 70 percent in less than two decades. 

All this doesn’t necessarily mean households are unaware of what they’re doing. Various surveys show them concerned about current economic conditions. But the same surveys show them confident about the future. 

The assumption seems to be that the future will be similar to the recent past, a period that included a soaring economy, spectacular rises in stock values, rising wages, falling unemployment and stable prices. 

That perspective seems also to include the assumption that the current economic weakness is a mere hiatus, a recess from the frantic pace of the past decade, and that the next decade will be as rewarding as the 1990s. 

It might be; it might not. 

One practical lesson from the past is that opinions delivered by so-called experts never are accompanied by guarantees.  

And without guarantees, households would seem to be taking a casino-type gamble. 

Well, perhaps not. Finance authorities will tell you that it is wise to borrow when borrowing rates are low, as they are today, and especially when the money is to be invested in growing assets, as houses have been. 

Averaged for geographical regions, home ownership has been rewarding. To a great extent, rising home equity has provided consumers with the borrowing power they’ve used to keep the economy this side of recession. 

In that sense, America’s consumers, usually referred to as either confident or cautious, have shown they are courageous too.  

It takes courage to take on risks, even the most prudent of risks. 

And nobody can assure America’s consuming households that the risks they are taking are prudent. 

John Cunniff is a business analyst for The Associated Press