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For the first time ever recorded, Americans owe more money than they make. Household debt levels have now surpassed household income by more than eight percent, reaching 108.4 percent in 2005, according to a May 2006 study by the Center for American Progress. Consumer debt is now at a record $2.17 trillion, reports the Federal Reserve Board and consumers cashed out a whopping $431 billion in home equity last year.

Christian E. Weller, the author of a recent Center for American Progress (CAP) report, ‘Drowning in Debt,’ says the middle class, specifically, is struggling.  Wages have been stagnant and they’re losing the battle to keep up with the cost of living.  “The data shows that people are borrowing more money not because of over-consumption, but because they’re caught in a bind,” says Weller, a senior economist at the CAP.  “In that bind, the only escape valve for middle class families is to borrow more money.”  NEWSWEEK’s Jessica Bennett spoke with Weller about the scope of America’s debt, why it’s so hard to get out from under, and how it will affect the economy in the future.

Depending on whom you ask, the winds may already be shifting for the housing market. All year, economists have warned of a bursting housing bubble and its potential impact on economic growth. However, a recent stream of encouraging data has some prominent prognosticators changing their tune.

One of the first in line was Alan Greenspan. As recently as May 18, the former Federal Reserve chairman put an exclamation point on the housing slowdown when he declared, “The boom is over.” But now, the “worst may well be over,” Greenspan was quoted as saying Oct. 7, after mortgage applications posted their biggest weekly gain since June, 2005.

A growing number of economists and analysts have come around to the ex-Fed chief’s view. Some investors may see sunnier skies too, as homebuilding stocks such as Lennar, DR Horton, and Pulte Homes have rebounded since touching 52-week lows in July.