This week the Federal Reserve released its quarterly report on new consumer debt. The numbers are staggering. Americans are piling up debt like there is no tomorrow. Total U.S. household debt has reached over $16 trillion in the second quarter!!! That’s $2 trillion more than at the end of 2019.
Just a few examples:
– Credit card balances alone jumped $46 billion in June.
– Auto loans up by $33 billion.
– Consumer loans increased by $25 billion.
– Non-housing loans increased by a staggering $103 billion, the highest jump since 2016.
We have had two consecutive quarters of negative economic growth (usually as considered a recession) with piling up so much consumer debt? Something, does not add up here.
Real wages aren’t keeping up with inflation and a consumer debt bubble continues to build. Something nobody is really interested to discuss publicly, especially before an election. But at some point, we must stop charging our plastic but this will have a real impact on the economy.
If this will happen, it earnings will fall in the 4th quarter, the most vital part of the year for consumer retail companies.
May be a lot more headwind in front of us?