It looks like our total household debt has shot up to a record $16.15 trillion. That is BANANAS. A recent Federal Reserve report took a deep dive into the insanity and came away with some stats that are equally bananas.
Here’s Five Fast Facts about America’s Bonkers Debt Level:
- 💸Slow Your Roll - The debt comes from increased borrowing due to inflation (duh). The Fed finally got off its keister and raised the overnight lending rate for the first time since 2019. The thought process here is that higher interest rates, rather than prices, will make it less likely for you to borrow. That would, in turn, put the brakes on the whole supply and demand thing for big ticket items.
- 🏠Betting the House - Mortgage debt caused most of the jump, increasing to $11.39 trillion at the end of June.
- 💳Charge! - Credit card balances spiked to $46B. Clearly inflation is causing people to put what they can’t afford on plastic. Sad!
- 🚘Getaway Driver - Auto loans jumped from $33B to $199B. This goes directly to that whole supply and demand thing again. You want a car right now? Your interest rate may change your mind…
- 🏫Back to School? - One place where debit didn’t see a sizable increase: Student Loans. Apparently we all need to pledge Delta Tau Chi.
🔥Bottom line: Americans love to spend, even in the middle of a recession. We’ll also complain about it while we keep spending. Others also can’t help but spend to, you know, pay bills and keep the lights on. Raising interest rates may considerably slow down prices on big ticket items like cars and homes but only time will tell.
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