Most people are broke and they can’t borrow… US household debt reached a record $17.1 trillion despite of rising credit rejections, driven by a desire to combat inflation.

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NY Fed: Household Financial Sentiment Declines Sharply, Long-Term Inflation Concerns 15 Month High

In August, the NY Fed’s consumer survey showed a worrying shift in the 1-Year inflation expectation, reversing a four-month decline. This indicator typically reflects oil prices (currently at a 2023 high). Moreover, 5-year inflation expectations reached their highest point since March 2022, compounding concerns. Additionally, households grew even more pessimistic about their financial outlook, painting a gloomy economic picture.

Consumer Credit Growth Takes a Nosedive, Revealing Negative Revisions

Consumer credit data shows weakening demand for mortgage refinancing as consumers turn to credit cards to cope with rising prices. Credit card debt is increasing rapidly due to inflation and reduced stimulus support. Job revisions have been negative, leading to uncertainty about the strength of the economy. Critics also question the accuracy of GDP numbers and suggest using Gross Domestic Income (GDI) for a more accurate assessment. The Federal Reserve is making decisions based on potentially flawed and frequently revised data, despite a significant increase in M1 Money.

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