Household Debt in the Consumer Age: Source of Growth - Risk of Collapse

32 Pages Posted: 7 Aug 2008 Last revised: 15 Apr 2013

See all articles by Barry Z. Cynamon

Barry Z. Cynamon

Better Future Forward; Jain Family Institute

Steven M. Fazzari

Washington University in St. Louis


The 2008 U.S. financial upheaval raises important questions about the sources of household consumption and debt growth, along with their macroeconomic effects. We argue that spending and financial preferences evolve as social norms interact with both cultural trends and institutional changes in household finance. We identify historical forces that raised consumption and debt over the past quarter century and interpret these events with Hyman Minsky's financial cycle framework. Strong consumption helped moderate recessions and boost growth since the mid 1980s. But unprecedented household debt has now culminated in a financial crisis that threatens to cause a deep recession.

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Keywords: Consumption, Household Debt, Minsky Cycle

JEL Classification: E22, E13, E37

Suggested Citation

Cynamon, Barry Z. and Fazzari, Steven M, Household Debt in the Consumer Age: Source of Growth - Risk of Collapse. Capitalism and Society, Vol. 3, Issue 2, Article 3, 2008, Available at SSRN:

Barry Z. Cynamon (Contact Author)

Better Future Forward ( email )

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Jain Family Institute ( email )

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Steven M Fazzari

Washington University in St. Louis ( email )

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