Business

Credit due

Before the holidays the Federal Reserve reported that American consumer debt reached a record level of $1.98 trillion, or $18,700 per U.S. household.

Maybe that's why "getting out of debt" was the top New Year's resolution in a recent poll, grabbing more votes than "losing weight." But just as those extra pounds didn't appear overnight, neither did the debt problem.

Robert D. Manning, a professor at Rochester Institute of Technology, argues that the crisis began in the 1970s when hourly wages dipped, housing prices soared, and consumers chose borrowing over cutting back on spending. And for the first time, financial institutions were willing to set up a tab.

"Banks didn't use to loan money to people who couldn't pay it back," said Mr. Manning, author of Credit Card Nation: The Consequences of America's Addiction to Credit. "Now, these companies want people in as much debt as possible."

With the average credit-card bill topping $8,000, is it possible to become debt free? Crown Financial Ministries, which teaches biblical standards for handling money, offers five basic steps to start:

1. Acknowledge God's ownership of every possession; 2. Give the Lord His part first; 3. Allow no more debt; 4. Develop a realistic balanced budget that will allow every creditor to receive as much as possible; and 5. Start retiring the debt.

Carb raters

With more than 10 million Americans following some form of high-protein, low-carbohydrate eating regime, food manufacturers are jumping on the bandwagon. More than 400 industry leaders attended last week's LowCarbiz Summit in Denver, including representatives of Kraft, Hershey's, and Tyson, as well as Wal-Mart and other retailers.

"Consumers want to eat the same way they've always eaten, but they also want to be healthier," said Harry Balzer, vice president of NPD Foodworld, a market-research firm. "They don't want to give up their favorite foods, but they want to lose weight."

While many health professionals remain skeptical of popular diets such as Atkins and South Beach, consumers continue to be bombarded with new products. Burger King recently launched a fire-grilled, low-carb menu that allows customers to order burgers without buns. That follows low-carb offerings from sandwich-shop chains Subway and Blimpie.

Not to be left behind, Coca-Cola and Pepsi are testing "mid-calorie" colas featuring fewer calories than the original, but better flavor than the diet drinks weight-conscious consumers typically purchase.

How long will the low-carb phase last? "It will last maybe two or three years," Mr. Balzer predicts. "When it's all over, there will still be a low-carb contingent, but it will never be at the interest levels we're seeing right now."

Balance sheet

Low home mortgage rates boosted residential construction nationwide to its strongest performance in 25 years. The Commerce Department reported last week that the number of housing units that builders broke ground on in 2003 totaled 1.85 million, up from 1.70 million in 2002.

The latest merger in the continuing consolidation of the U.S. banking industry is a $6 billion deal between Regions Financial Corp. and Union Planters Corp. The new Regions Financial will have 5.1 million customers and 1,400 branches across 15 states from Texas to the Atlantic coast.

With strong December sales, Toyota became the world's No. 2 automaker behind General Motors in 2003. Toyota sold 6.78 million vehicles worldwide last year, slightly more than Ford Motor Co. The change in status comes as no surprise to industry officials, given Toyota's steady gains in North America with a growing portfolio that now includes pickups, SUVs, and luxury cars.

Struggling to find its place in the digital photography market, Eastman Kodak Co. will cut as many as 15,000 jobs over the next three years. Kodak's difficulties are largely based on the popularity of digital cameras, which outsold traditional film cameras in the United States for the first time last year (see "35mm negative," Jan. 31).