So how is Bidenomics working out for you? Regardless of the cheerful tittering coming from the White House Press Secretary, it’s not going too well for a lot of working-class people and the polls reflect that. But now there’s yet another data point to toss onto the bonfire. Things are going particularly poorly for cash-strapped families that have found themselves running up bills on their credit cards. And there are a lot more people doing that these days. According to the Federal Reserve Bank of New York, by the third quarter of this year, total American credit card debt reached $1.08 trillion. Yes, that’s “trillion” with a “T.” That’s not just more than $150 billion higher than at the same point last year, but it’s the highest year-to-year increase ever recorded. And it’s not expected to ease any time soon. (CNN)
The resilient consumer has kept the US economic engine running, but it’s coming at a big cost: Americans are piling up record credit card balances, and more and more are falling behind on those payments.
During the third quarter, credit card balances hit a fresh high of $1.08 trillion, rising $48 billion from the prior quarter and leaping by a record $154 billion from the year before, according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit released Tuesday.
The year-over-year increase is the largest since the New York Fed started tracking that data in 1999.
Household debt increased 1.3% to $17.29 trillion in the third quarter.
The note at the end of that excerpt adds another bit of bad news. Total household debt (including credit card debt) is now well over $17 trillion. That’s not as bad as the debt the federal government is carrying (yet) which the taxpayers are also responsible for in the end, but it’s pretty massive.
Two factors are playing into this surge, both of which should have been avoidable. There may be some people out there who are simply unaware of the dangers of credit card misuse, but they are surely only a small minority. People’s budgets are strained under Bidenomics and charging bills on plastic may be the only way some people can keep the debt collectors away from the door.
The second factor is interest rates. They have continued to climb steadily thanks to all of the money that Washington keeps printing and the adjustments that the Fed has to make in response. So not only are people charging more expenses on their plastic, but the interest that piles up on that debt every month is climbing faster than it has in decades. It’s a recipe for disaster for any family on a limited budget without a healthy nest egg.
Credit card debt is (almost) the worst sort of debt you can carry. The interest rates are always ridiculous compared to some other options and it’s far too easy to burn through cash quickly. When we were younger, my wife and I went through a thankfully brief period where we just started “splurging” and wound up running up several thousand dollars of essentially empty debt on our credit cards without even giving it much thought. Thankfully, we regained our senses, buckled down, and paid it all off, but it took time. We’ve never done it again.
But that was just us being young and foolish during a strong economy. A lot of the people in this position today may not see any other reasonable options. The CNN article linked above somewhat stupidly starts off by praising “the resilient consumer” for continuing to spend enough money to keep the economy limping along. But as already noted, a lot of those people are not just “consuming.” They’re covering the necessities and probably even some of their bills. This is not a healthy economy and Washington simply has to get the spending under control and start doing better.
Read the full article here