- Record-High Household Debt: The fact that household debt in the U.S. has reached $17.1 trillion is alarming. High levels of household debt can strain individuals and families, making it difficult for them to manage their finances and save for the future.
- Mortgage Debt: The record $12.0 trillion in mortgage debt indicates a growing burden on homeowners, especially as mortgage rates have risen to 7.5%. Higher mortgage rates can make it more expensive to own a home and may deter potential buyers.
- Auto and Student Loans: The significant levels of auto and student loan debt ($1.6 trillion each) suggest that many Americans are carrying substantial non-mortgage debt burdens. This can impact their ability to save and invest for the future.
- Credit Card Debt: The record $1.0 trillion in credit card debt indicates that many individuals are relying on credit to make ends meet. High-interest rates on credit card balances can lead to a cycle of debt that is difficult to escape.
- Rising Oil Prices: The increase in oil prices by approximately 40% in just three months can have a cascading effect on the economy, leading to higher costs for transportation, manufacturing, and everyday goods and services.
- High Mortgage and Credit Card Rates: Mortgage rates at 7.5% and credit card rates at a record 25% can significantly impact borrowing costs, making it more expensive for individuals and businesses to access credit.
- Inflation Concerns: The comment that borrowing more debt is not the solution to high inflation is a valid concern. High inflation erodes the purchasing power of money, and excessive borrowing can exacerbate the inflationary pressures.
- Sustainability Concerns: The overall picture painted by this data is one of financial strain, rising costs, and the potential for financial instability. This level of debt and the associated economic conditions may not be sustainable in the long run.
The accumulation of record-high levels of debt across various sectors, coupled with rising interest rates and inflation, raises legitimate concerns about the sustainability of the current economic environment.
U.S. Now Has:
1. Record $17.1 trillion in household debt
2. Record $12.0 trillion in mortgages
3. Record $1.6 trillion in auto loans
4. Record $1.6 trillion in student loans
5. Record $1.0 trillion in credit card debt
The average house payment is about to hit $3,000/month…
— Win Smart, CFA (@WinfieldSmart) September 17, 2023
Meanwhile, the current government’s deficit situation is a significant concern and could have far-reaching economic implications.
The US is now running a deficit that equals 8% of GDP, slightly above 2008 lows.
Furthermore, deficit spending as a percentage of GDP is roughly DOUBLE the historical average of 4%.
While the Fed is no longer forecasting a recession, deficit spending is at 2008 levels.
This is… pic.twitter.com/Pna498KGrc
— The Kobeissi Letter (@KobeissiLetter) September 16, 2023
The game plan is to carry on until it cannot be carried on any longer.
Then, a Great Reset. t.co/qlkJiV1lVd
— Chris "Context Matters" Martenson, PhD (@chrismartenson) September 16, 2023