The reality is that with unprecedented levels of debt and minimal savings, U.S. interest rates should be much higher than their historic norms. But rates have stayed low because the Fed has been able to artificially suppressing them. The markets are about to change that fast.
Consumers are putting saving on the back burner
Some Americans’ finances are on very thin ice.
One in five Americans say they have more credit-card debt than they do in emergency savings, according to a report published Thursday from the personal-finance company Bankrate. Another 12% said they had no credit card debt, but they also had no savings. Bankrate surveyed 1,000 people during early February.
But the report isn’t all bad news. More than half (58%) said they had more in emergency savings funds than in credit-card debt, the highest percentage Bankrate has ever had, tied with the amount who said this in 2015.
Financial experts typically recommend that all consumers have three to six months’ worth of expenses saved in an easy-to-access emergency fund, to guard against any unexpected expenses. Bankrate did not ask exactly how much those surveyed had saved.
“We’re seeing progress,” said Greg McBride, chief financial analyst at Bankrate. “Unemployment is coming down, people are making more money, and they’re finally making progress on right-sizing the equation between credit-card debt and emergency savings.”
As the Federal Reserve reported most recently two weeks ago, US consumer non-mortgage debt has never been higher: as of December 31, 2017, US households had a record $1.0 trillion of credit card/revolving loans, a record $1.3 trillion of auto loans, and a record $1.5 trillion of student loans.
Among these, credit card and auto loans, in particular, have been experiencing accelerating delinquencies. As a result, finance companies/banks have been increasing bad debt provisioning to build balance sheet reserves due to expectations of rising defaults. The chart below illustrates the highest reported net charge off rates (NCOs) in years.
Personal savings rate
The CEO of Assurant, Inc. (insurer of mobile devices) recently stated in 2017, in talking about the U.S. consumer: “The reality is half of Americans can’t afford to write a $500 check.” This speaks to the great wealth inequity in the U.S. exacerbated by the Fed’s ZIRP and QE policy.
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2. Consumer Credit and its Share of Real Disposable Income are at Record Highs: Consumer credit is running at $3.8 trillion surpassing its 2008 peak by +45%…
Total Consumer Credit Owned & Securitized ($in Billions)
… and accounting for a record 29% share of consumer real disposable income and 19% of nominal GDP.
80% of Americans are in debt. What does this mean for the future?
This is an old article, but whatever it still holds true obviously.
This debt based culture imposed on us by the government, imposed on us by banks, imposed on us by credit card companies, imposed on us by powerhouse institutions is taking its toll.
America is on the verge of bankruptcy and 80% of Americans are living paycheck to paycheck. Slave to the 9 to 5 rat race. Not able to live luxurious lives, not able to go on vacations, forced to live on government money in increasing numbers.
The economy is trash right now and that is by design. Of course when you have a private Federal Reserve that lends money to our untrustworthy government willing to go into massive debt at an interest, then there will always always always be more debt than actual money in circulation.
So what are the implications of this debt based system. Are we about to go bankrupt? Will the IMF have to come in and bail us out and impose harsh austerity measures like they did to Greece? Are they going to consider a universal basic income in which they basically give us a small amount of money to be their slaves? Are they going to try to push a global currency on us where the power becomes even more limited and even more centralized under the guise that this is the only way we can prevent bankruptcy again? Are they about ready to replace unnecessary people with robots and automation? Will they kill those people off?
Crazy world and it seems like there’s a lot of stuff about to happen and the powers that be are certainly planning for something.
It’s just so sad to see 80% of Americans in debt and the people we elect to serve us don’t care about us at all.