Jerome Powell went to Capitol Hill this week. During his testimony before a congressional committee, the Fed chair insisted, “There is nothing about this economy that is out of kilter or imbalanced.” In this episode of the Friday Gold Wrap Podcast, host Mike Maharrey takes issue with Powell’s assessment and points out some things that are, in fact, way out of kilter.” He also touches on coronavirus and the markets, consumer debt, and Donald Trump.
Americans are driving the US economy along with borrowed money. The question is how much longer can it last?
Consumer debt surged once again in December as Americans charged up their credit cards for the holidays. Total consumer credit grew by $22.1 billion in December, according to the latest data released by the Federal Reserve. That represents an annual growth rate of 6.3%. Total consumer debt now stands at a record $4.197 trillion.
We’re told that this is the greatest economy in history. Stock markets are surging. Unemployment is low. And yet despite the good times, a shocking number of Americans live paycheck to paycheck.
Several surveys cited by MarketWatch reveal the precarious financial situation many Americans find themselves in. This is less than ideal in an economy dependent on consumer spending.
Reuters has dubbed the 2010s the “decade of debt.”
The Reuters report focused on the ballooning levels of corporate debt, but consumer and government indebtedness has skyrocketed over the last 10 years as well. This massive debt bubble poses a significant systemic risk to the financial system and the economy. Some in the mainstream are starting to hint at this, but they still don’t seem to recognize the magnitude of the problem.
We have a trade deal! Maybe. Meanwhile, the Fed wrapped up its last FOMC meeting of the year this week and did nothing. But Powell and Company did give us some indication about what we should expect next year. The week’s news played tug-o-war with gold. In this episode of the Friday Gold Wrap, host Mike Maharrey breaks it all down and says there’s a lot to be skeptical about, both with the trade deal and the rhetoric coming out of the Fed.
American consumers are still propping up the economy spending money they don’t have. But how long can it last?
After a slight slowdown in September, consumer borrowing jumped again and set another new record in October, according to the latest data released by the Federal Reserve.
America’s economy is built on consumption. Average Americans have been pushing the US economy along, spending money they don’t have. But as we’ve reported, there are signals that the credit cards might be close to maxed out. Now there appears to be another warning sign – the wealthy are reining in their spending.
How much more can the auto loan bubble blow up before it pops?
Total auto loans and leases outstanding for new and used vehicles increased by another 4.3% year-on-year in the third quarter, according to the latest data from the Federal Reserve. This was a factor in pushing total American consumer debt to a new record of $4.15 trillion in September.
Meanwhile, auto loan delinquencies are surging.
There was more optimism about a trade deal this week. There was also more pessimism about a trade deal this week. Markets reacted accordingly. But there was some other interesting news out there. Jerome Powell lectured Congress about the national debt and last month’s inflation data came in hotter than expected. Host Mike Maharrey covers these stories and more, and basically ignores the trade war gossip, on this episode of the SchiffGold Friday Gold Wrap podcast.
American consumer debt pushed to a new record of $4.15 trillion in September. Part of that equation – the continued surge in the levels of student loan debt.
Student loan balances jumped by $32.9 billion in the third quarter this year, pushing total outstanding student loan debt to a new record of $1.64 trillion. Student loan balances have grown by 5.1% year-on-year.
Over the last decade, student loan debt has grown by 120%. Student loan balances now equal to 7.6% of GDP. That’s up from 5.1% in 2009.