Quote:
Originally Posted by Chico23231
Here’s the problem we are facing short term in the economy now that the fed and the administration mishandled inflation and their energy policy:
American debt:
Last month, total consumer debt, which includes debt from credit cards, student loans and auto loans, went up $38 billion. In total, Americans now have $4.57 trillion in consumer debt, an all-time record.
The $38 billion increase was a 10.1% increase from March, so the situation is escalating quickly. When mortgage debt is added into the equation, American household debt sits at $15.8 trillion, which is also an all-time high.
Bottom Line: Americans have never been in more debt than they are now.
According to the Fed, Americans opened up 229 million new credit card accounts last quarter, which is higher than pre-pandemic levels.
Now the fed is raising interest rates fast as fuck:
And… because the Fed is raising interest rates in an attempt to slow down inflation, carrying a balance on a card month to month is going to start costing even more. For example, the average annual rate or APR on most credit cards is around 16% right now, but it’s expected to be 18% or 19% by the end of this year. That would be the highest rate in history.
As a result, Americans are saving less money each month. In April for example, the U.S. Savings rate fell to only 4.4%, the lowest mark since 2008.
Quite the problem
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Another problem around debt and interest rates is the government's debt. The Fed has kept rates near 0 for so long in order to make national debt maintenance more palatable. As interest rates spike, the debt maintenance on our debt will consumer more of the national budget, which can increase inflationary pressures.
All in all, this economy is in for some serious bruises. And political blame games only deflects from taking the steps necessary to minimize the pain.