Household debt poses new risks

Australia and several other economies that escaped the worst of the global financial crisis are now threatened by their massive run-up in household debt, the Bank for International Settlements has warned.
The BIS is the Swiss-based central bank of central bankers and one of the few institutions that warned of the risk of a global financial crisis a couple of years before it happened.
In an uncharacteristically optimistic annual report, the BIS was generally upbeat about prospects for the global economy in the short term.
“The near-term outlook appears the best in a long while,” BIS general manager Jaime Caruana noted in his speech to the bank’s annual general meeting.
“Consensus and international organisation forecasts point to further gradual improvement this year. Global growth is projected to reach 3.5 per cent – in line with the long-term historical average, and less than half a percentage point below the level observed in the decade before the global financial crisis.”
Consistent with this growth, the BIS noted that virtually all major economies were now expanding, with many now reporting job markets close to estimates of full employment (generally considered to be an unemployment rate under 5 per cent, depending on the individual economy).
It also observed with approval the emerging trend towards “normalising” monetary policy, notably the US Federal Reserve’s two interest rate rises thus far this year.– ABC