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

Indebted US Consumers Losing Confidence

  by    0   0

With debt up to his eyeball, the US consumer seems to be losing confidence in the US economy.

Last month, Spencer Schiff wrote an article warning about declining consumer confidence, writing, “any shift in consumer psychology/behavior could knock a critical support out from under our economy.”

In fact, consumer spending makes up about 70% of US GDP. If Americans stop shopping, the economy grinds to a halt.

Meanwhile, consumer debt continues to skyrocket. In effect, US consumers are propping up the US economy with money they don’t have.

Total consumer debt in the US now stands at a record $4.123 trillion (seasonally adjusted). In July (most recent data) Americans added another $10 billion to their credit card balances. It was the biggest jump in credit card debt since November 2017. Americans now owe some $1.o8 trillion on their credit cards.

Most mainstream pundits and analysts continue to spin the growth in American indebtedness as a positive for the economy. Here’s how Bloomberg reported it.

The surge in borrowing indicates Americans, supported by higher wages, were feeling confident enough about their financial situation to continue borrowing and spending. The economy, beset by weakness in manufacturing, housing and capital investment, remains highly dependent on the US consumer to keep driving the expansion.”

But does massive credit card spending really mean consumers are confident? Because based on the latest numbers, it doesn’t appear they are confident at all.

In fact, consumer confidence plunged in September. It was the biggest drop in nine months. The Conference Board index of consumer attitudes fell to 125.1, from a downwardly-revised 134.2 the month before. Analysts blame “the escalation in trade and tariff tensions” that we saw at the end of August. But the trade war has been going on for months. Could there be other reasons for this drop in confidence? Could it be because they are getting closer to maxing out those credit cards?

Credit card spending doesn’t necessarily mean consumers are confident about the future. It could just as well mean they are tapped out and charging everyday purchases on plastic. In fact, the growth in consumer debt could just as well mean Americans are struggling to make ends meet. After all, a lot of people use their credit cards as an emergency fund.

Even if the US economy has experienced some kind of confidence-driven spending spree, it can’t go on forever. Credit cards have this inconvenient thing called a limit. And they have to be paid off at some point. At best, “confident” American consumers are borrowing money from their future. What happens when the future gets here?

As Spencer wrote, “It may soon become apparent that consumer spending, currently our primary recession deterrent, has ground to a halt. If so, a serious economic downturn awaits.”

WhyBuyGoldNowBanner.070815.590

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

Outflows of Gold from ETFs Slowed Significantly in November

The flow of metal out of gold-backed ETFs slowed significantly in November, with North American ETFs charting gold inflows for the first time in five months. A total of 9 tons of gold flowed out of ETFs globally, but total assets under management increased by 2% thanks to the rise in the price of gold.

READ MORE →

The Summer of Central Bank Gold Buying Extends Into the Fall

Central banks gobbled up gold over the summer and the buying spree has continued into the fall. Globally, central banks added another net 42 tons of gold to their reserves in October.

READ MORE →

Silver Looks Like a Real Bargain Right Now

At the current price, silver is a real bargain. Gold went on a run late last week, setting an all-time record high last Friday and breaking the $2,100 level for a brief time in overseas trading Sunday night. Silver also rallied but continues to lag behind gold. In fact, silver looks significantly underpriced based on […]

READ MORE →

Unrealized Losses at US Banks Exploded in Q3

Unrealized losses on securities held by US banks exploded by 22% in the third quarter. Of course, unrealized losses don’t really matter — until they do. This is yet more evidence that the financial crisis that kicked off last March continues to bubble under the surface.

READ MORE →

“Resilient” American Consumers Cutting Back Spending, Running Up More Debt This Holiday Season

Holiday shoppers plan on cutting back on spending and piling on even more debt this year, and nearly a quarter of Americans still haven’t paid off their debt from last year’s holiday spending spree. These were just a few revelations in a recent WalletHub survey that indicates American consumers aren’t quite as “resilient” as pundits […]

READ MORE →

Comments are closed.

Call Now