Debt within the American household continues to climb as higher prices force people to use credit card funds and other loans to make ends meet.
A whopping $40.1 trillion has been added to the debt load according to the Federal Reserve – which shows a 10.5 percent increase year over year – beating out the expected $27 trillion.
According to the Federal Reserve, Americans owe $4.627 trillion in consumer debt, which includes credit card debt, student loans and auto loans and excludes mortgage debt.
Mortgage debt in the United States is currently sitting just above $12 trillion in total – meaning consumer debt is more than $16.2 trillion.
Only three years ago, in 2019, debt rose year over year at 3.6 percent – by June 2022, the increase is a heart attack inducing 16 percent – revolving credit debt rising by $14.8 billion and credit card (revolving debt) in total now stands at $1.125 trillion above the pre-pandemic record.
Schiff Gold reported:
Americans, by and large, kept their credit cards in their wallets and paid down balances at the height of the pandemic in 2020. This is typical consumer behavior during an economic downturn and the trend was even more pronounced with pandemic stimulus checks. Credit card balances were over $1 trillion when the pandemic began. They fell below that level in 2020 with an 11.2% drop. We saw small upticks in credit card balances in February and March of last year as the recovery began, with a sharp drop in April as another round of stimulus checks rolled out. But Americans started borrowing in earnest again in May 2021. Since then, we’ve seen a steady increase in consumer debt with a huge surge in borrowing in March and April.
Not only are credit card balances growing; consumers are trying to find ways to borrow even more. According to Fed data, Americans opened 233 million new credit card accounts in the second quarter of this year. That was the largest number of new accounts opened in a single quarter since 2008 – the beginning of the Great Recession.
Aggregate limits on credit card accounts increased by $100 billion in Q2 and now stand at $4.22 trillion. That reflects the largest increase in more than 10 years.
Rising interest rates are bad news for Americans depending on credit to pay their bills. With interest rates rising, Americans are paying more in interest charges every month, and many will see minimum payments rise. Average annual percentage rates (APR) currently stand at just over 17.42%. That’s up from 16.6% just two months ago. Analysts say they may well rise above 18% by the end of the year, breaking the record high of 17.87% set in April 2019. With every Federal Reserve interest rate increase, the cost of borrowing will go up, putting a further squeeze on American consumers.
In the second quarter of 2022, credit attached to auto loans increased significantly to $199 billion – a jump of around $33 billion – and the numbers suggest that the number of loans have not increased, but the amount that is being borrowed – Americans are paying more for their vehicles.
Somehow though, Federal Reserve chair Jerome Powell keeps telling Americans that “households are in very strong financial shape.” – which shows how out of touch the current administration is.
If you want the truth, never listen to a Democrat.
Of course democrats don’t believe we are in a recession. They are eating their ribeye steaks while we the people are eating beans and rice and being taxed to death to pay for their idiototic, pathetic bills they have passed. God and Trump please save us!
the national socialists are planning for insurrection. that is why the 87,000 new IRS agents will be armed. none of this will end well. as far as indebtedness goes, credit card debt is up over 50% in the last year and the interest on these accounts is about to go up. however, it is no surprise the dimwit does not see a problem with this.
Are we supposed to all the sudden believe that the Democrats have anyone’s best interest in mind? They do, their own!
Rush Limbaugh on occasion would retort, when are the American people going to wake up. He would say, if the American people have not awakened yet, unfortunately, never.