The U.S. economy is on the verge of crisis, with alarming indicators pointing to an inevitable downturn. The November 2024 Consumer Sentiment Index plunged to 71.8, reflecting widespread anxiety among Americans about their financial futures.
Credit card loan defaults have soared to levels not seen since the 2008 financial meltdown. In the first nine months of 2024, lenders wrote off $46 billion in seriously delinquent balances—a staggering 50% increase from 2023. Lower-income Americans are in dire straits, with Moody’s Analytics revealing their savings rate has hit zero, leaving them unable to make even minimum monthly payments.
OUCH! US credit card defaults jump to highest level since 2010. Credit card lenders wrote off $46bn in seriously delinquent loan balances in first 9mths of 2024, up 50% from the same period in the year prior and the highest level in 14yrs. https://t.co/wSQxRwyZOD pic.twitter.com/40sZbk2Y54
— Holger Zschaepitz (@Schuldensuehner) December 30, 2024
Corporate debt signals further trouble. Bond defaults now exceed 2008 levels, and over 400 businesses filed for bankruptcy in 2023. Private equity continues to fund leveraged buyouts at historically low yields of 9.41%, masking the deeper rot in corporate financial health.
The housing market has ground to a halt, with high mortgage rates and surging prices locking both buyers and sellers in place. Existing home sales have plummeted to levels rivaling the depths of the Great Financial Crisis, leaving the market frozen.
Neither the Federal Reserve’s tools nor Trump’s pro-growth policies—no matter how well-intentioned—can address the root issue: consumer debt is unmanageable. Millions of indebted Americans are unable to make even minimum payments, leaving bankruptcy as their only option. With defaults and financial strain mounting, a crisis looms closer than many realize.
Sources:
https://www.statista.com/statistics/216507/monthly-consumer-sentiment-index-for-the-us/
https://www.ft.com/content/credit-card-loan-defaults-gfc-peak
https://www.pymnts.com/credit-cards/2024/credit-card-defaults-surge-to-14-year-high/
https://www.usnews.com/topics/subjects/housing-market
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