ALL OF US Consumers Drowning In Credit debt
Consumer spending composed over 70% of GROSS DOMESTIC PRODUCT in the second quarter.
Consumer borrowing provides slowed somewhat from the report level we saw in June, but Americans continue to keep pile on the debt.
Consumer debt grew by $14. 4 billion within August to $4. thirty-five trillion, according to the latest data from the Federal government Reserve . That represents a 4% increase.
This follows over the heels of a 4. 8% increase in July after a report 10. 6% increase in 06.
The Federal government Reserve consumer debt figures include credit card debt, student loans and automobile loans, but do not factor in home loan debt. When you include mortgage loans, Americans are buried under nearly $15 trillion in debt.
Revolving credit, primarily made up of credit card debt flower by $1. 4 billion, a 3. 8% increase. Americans now owe more than $1 trillion in credit debt for the first time since the beginning of the coronavirus pandemic.
Non-revolving credit, including auto loans plus student loans, rose by $11. 4 billion, a 4. 1% increase. A fall in auto sales held the growth of non-revolving credit down slightly within August.
Even while credit card debt dropped during the pandemic, nonrevolving credit continued in order to expand through last year plus into 2021. Americans now own more than $3. 35 trillion in non-revolving debt.
Consumer spending made up over 70% of GDP in the second quarter . It seems as stimulus checks sold out in May, Americans turned to plastic-type to continue their spending spree. As Reuters reported it , “ The rise in June could describe the sustained robustness in consumer spending during last quarter, even as the movement of stimulus money through the government ebbed. ” Customers have continued spending on plastic material over the last couple of months.
Through the pandemic, Americans, by and large, kept their credit cards in their wallets and paid straight down balances. This is typical consumer behavior during an economic recession. Credit card balances were more than $1 trillion when the outbreak began. We saw small upticks in credit card balances in February and 03 of this year as the recuperation began, but a sharp fall in April as stimulation checks rolled out. But Americans started borrowing in earnest again in May and June, with a $28-billion-plus raise that eclipsed anything we would seen since the pandemic started.
The Government Reserve and the US federal government have built a post-pandemic “ economic recovery” on stimulus and debt. It really is predicated on consumers investing stimulus money borrowed plus handed out by the federal government or running up their own bank cards. As Peter Schiff noted in his podcasting , were it not for the Fed’s easy-money plan, consumers couldn’t drive this particular borrow and spend economy.
“ Obviously, if consumers are not able to borrow all this cash, then they couldn’t have spent. They couldn’t have bought all of this stuff but for their ability to borrow money. And the only reason they can borrow cash is because the Fed is usually supplying it. The Given is making all this money available. It’s holding interest rates artificially low so that people can pay the interest on all of this money that they’re borrowing. Which is what is helping to create a large amount of these service sector job opportunities that would not exist but for the ability of Americans to visit deeper into debt. ”
But an economy built upon debt and stimulus basically isn’t sustainable in the long term. In an interview on NTD news , Schiff mentioned the US economy is hooked on stimulus, both direct govt handouts and the borrowing Government Reserve policy incentivizes. Ultimately, the addict is going to overdose.
“ The overdose would take the form of a dollar crisis, sovereign debt crisis, runaway inflation. And we’re already starting to see the beginnings of this in consumer prices. Look at oil prices … take a look at other commodity prices across the board that have been strong. Look at cotton prices that have over doubled recently. But , you understand, these prices still have a long way to go up. And they’re going to go up a lot I think in the 12 months ahead. ”
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