Category Private Debt out of control

May 16 2024

American Households Hold Record Debt Q1 2024


Posted Originally on May 16, 2024 By Martin Armstrong 

Debt Burden

The New York Federal Reserve reported that American households set a new record after plummeting into $17.69 trillion of debt, a 1.1% ($184 billion) increase from Q4 2023. Worse, the number of delinquencies is rising as households struggle to make ends meet amid the cost of living crisis. Inflation is not waning, taxes are rising, and America’s debt burden has become utterly unmanageable.

Mortgage balances rose by $190 billion and reached $12.44 trillion by March. People are paying far more in interest alone than they have in recent years. Those who bought in the hopes of refinancing are not in a good position. Auto loan debt rose by $9 billion, reaching $1.62 trillion.

Americans have been attempting to pay off their credit card balances, with overall credit card debt declining by $14 billion to $1.12 trillion. Yet, that was close to a record-high for credit card debt and we tend to see balances lowered after the holiday retail spending spree ends. Consumers do not want to pay those 20%+ interest rates on cards but many are forced to do so simply to put food on the table.

InflationWarAidMeme

Delinquencies are rising – this is a major issue. It is difficult to crawl out of debt once someone is deep within the cycle. “In the first quarter of 2024, credit card and auto loan transition rates into serious delinquency continued to rise across all age groups,” said Joelle Scally, regional economic principal within the Household and Public Policy Research Division at the New York Fed. “An increasing number of borrowers missed credit card payments, revealing worsening financial distress among some households.”

Credit card delinquencies have reached their highest levels since 2012 when America was recovering from the Great Recession. In fact, by the end of Q1 2024, around 3.2% of all outstanding debt was in delinquency. The New York Fed reported a rise in missed payments across all debts, including those 90 days past due.

No foreign nation is coming to offer America a bailout check. The Biden Administration has made it clear that American households are NOT Washington’s priority. We are to continue working and paying taxes in order to fund foreign wars and climate change packages. How else will we house those 7+ million illegal migrants and offer them free healthcare and shelter? How else will we pay off the student loans for millions? How else will we continue to grow the public sector and pay for countless new social programs? Americans are in serious debt, and Washington is all but ensuring this trend continues.

Jun 5 2023

Credit Card Debt on the Rise


Armstrong economics Blog/USA Current Events Re-Posted Jun 5, 2023 by Martin Armstrong

Credit card debt in the US spiked to its highest quarterly level in Q4 2022 after increasing by $85.8 billion. The average American household has about $10,000 in credit card debt, marking an 8.9% YoY increase. Now, Americans are facing $1 trillion in credit card debt due to rising APR and inflation.

The Federal Reserve reported that credit card debt has risen by $250 billion over the past two years amid record inflation. Consumer spending declined during the pandemic, as did credit card debt. However, inflation was nowhere close to what it is today. Credit balances declined by $100 billion from Q1 of 2020 to Q2 of 2021. Consumers were paying off their debts during this time, aided by numerous stimulus packages provided by the government.

Everything changed when Biden took office, killed America’s energy independence, and inflation began to spike. The central bank raised rates right before the war in Ukraine broke out, and have continued to do so at every meeting since. Various data collectors noted that consumers are not using their credit cards for luxury goods – they’re using credit to simply get by and pay for essentials.

Bankrate reported that 46% of cardholders cannot pay off their monthly credit card payments, up 7% from last year. The average APR is around 24% as of May 2023. The US Bureau of Labor Statistics claims that the CPI rose 0.4% in April after increasing 0.1% in March. I reported how the true inflation rate is over 30%; they do not want to scare the public by posting the real data. Food, energy, shelter, and all the essentials to survival have reached historic levels. If nearly half of people cannot pay their credit card balances off each month, and interest is at a record high, consumer debt is guaranteed to rise continually. Nothing is more inflationary than war, and our war cycle is picking up going into 2024. So not only is the US government drowning in debt, but the average American is also struggling to make ends meet.