Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Consumer Debt Grew at Record Rate in June

  by    0   1

After posting a 10.4% increase in May, consumer debt continued to expand, growing by a record rate in June.

Consumer credit grew by $37.69 billion in June, according to the latest data from the Federal Reserve. That represents a 10.6% increase. The Fed also revised the May number up from $35.3 billion to $36.6 billion.

The big expansion in consumer credit was far above the 20.8 billion expected.

Americans collectively owe $4.32 trillion in consumer debt.

The Federal Reserve consumer debt figures include credit card debt, student loans and auto loans, but do not factor in mortgage debt. When you include mortgages, Americans are buried under nearly $15 trillion in debt.

Revolving credit, primarily made up of credit card debt rose by $17.9 billion in June, a whopping 22% increase. Americans now owe $992.2 billion in credit card debt.

Consumer spending made up over 70% of GDP in the second quarter. It appears as stimulus checks ran out, Americans turned to plastic to continue their spending spree. As Reuters reported it, “The surge in June could explain the sustained robustness in consumer spending during last quarter, even as the flow of stimulus money from the government ebbed.”

Through the pandemic, Americans, by and large, kept their credit cards in their wallets and paid down balances. This is typical consumer behavior during an economic downturn. Credit card balances were over $1 trillion when the pandemic began. We saw small upticks in credit card balances in February and March but a sharp drop in April as stimulus checks rolled out. The 28-billion-plus increase in May and June eclipsed anything we’ve seen since the pandemic began.

Non-revolving credit, including auto and student loans, grew by $19.8 billion, a 7.2% increase. Even as credit card debt dropped during the pandemic, nonrevolving credit continued to expand through last year and into 2021.  Americans own more than $3.3 trillion in non-revolving debt.

The Federal Reserve and the US government have built a post-pandemic “economic recovery” on stimulus and debt. It is predicated on consumers spending stimulus money borrowed and handed out by the federal government or running up their own credit cards. As Peter Schiff noted in his podcast, were it not for the Fed’s easy-money policy, consumers couldn’t drive this borrow and spend economy.

Obviously, if consumers were not able to borrow all this money, then they couldn’t have spent. They couldn’t have bought all this stuff but for their ability to borrow money. And the only reason they can borrow money is because the Fed is supplying it. The Fed is making all this money available. It’s holding interest rates artificially low so that people can pay the interest on all this money that they’re borrowing. And that is what is helping to create a lot of these service sector jobs that would not exist but for the ability of Americans to go deeper into debt.”

This is precisely why Schiff says the markets are trading on fantasy if they believe the central bank will actually tighten monetary policy. The bubble economy depends on air supplied by the Fed.

If the Fed stops supplying that air, the whole thing is going to deflate.”

Get Peter Schiff’s key gold headlines in your inbox every week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!

Related Posts

Gold Hits New All-Time Record High

Gold hit a new all-time nominal high, surpassing the previous record set in December of the previous year. The precious metal’s price reached approximately $2,140, indicating a robust and continuing interest in gold as a safe-haven asset, despite a rather peculiar lack of fanfare from the media and retail investors. This latest peak in gold […]

READ MORE →

Is a Weak Yen Feeding the Global Gold Bull?

The gold price has been surging, with unprecedented central bank demand gobbling up supply. It has been a force to behold — especially as US monetary policy has been relatively tight since 2022, and 10-year Treasury yields have rocketed up, which generally puts firm downward pressure on gold against USD. 

READ MORE →

World Gold Council: “Blistering Central Bank Buying” Fuels Strong Gold Demand

Total gold demand hit an all-time high in 2023, according to a recent report released by the World Gold Council. Last week, the World Gold Council (WGC) released its Gold Demand Trends report, which tracks developments in the demand for and use of gold around the world. Excluding over-the-counter (OTC) trade, 2023 gold demand fell slightly from 2022 […]

READ MORE →

VIX – The Calm Before the Storm

The VIX, often referred to as ‘Wall Street’s fear gauge,‘ is currently portraying a sense of calm among investors, registering well below the 20 level. 

READ MORE →

Four States Consider Lifting Taxes on Precious Metals

Citizens of Georgia, Kentucky, Wisconsin, and Kansas may soon enjoy lower taxes on precious metals if recently introduced pro-metal bills are made law in 2024.

READ MORE →

Comments are closed.

Call Now