The Federal Reserve bumped up interest rates another 25 basis points this week. The target federal funds rate now stands at 1.75%.
“Well, OK,” you might be thinking. “But this is just a bunch of wonkish policy stuff. What’s it to me?”
In a nutshell, it means your debt is going to cost you more. And that’s not good in an America where household debt has spiraled to record levels.
Could the house of credit cards Americans have built be on the verge of collapse?
Earlier this week, the New York Fed released the latest data on US household debt, revealing it has grown to a record $13 trillion. Americans have been spending, but they’ve been putting a lot of it on plastic. Credit card balances grew by $24 billion in the last quarter of 2017 alone. Meanwhile, US consumers owe $1.22 trillion on vehicle loans. This can only go on for so long. And there are indications that the American credit card spending spree may be winding down.
Retail sales unexpectedly fell in January, recording their biggest drop in nearly a year.
Passage of a GOP budget that added $300 billion in new spending has focused plenty of attention on surging federal government debt over the last week or so. But Uncle Sam isn’t the only one running up those credit cards. Everyday Americans are also piling on the debt.
Total household debt soared to a record $13 trillion dollars in 2017, according to the latest data released by the Federal Reserve Bank of New York’s Center for Microeconomic Data.
Last summer, US Global Investors CEO Frank Holmes called debt “the mother of all bubbles.” That bubble continues to blow up.
US consumer debt increased even more than expected in September. According to data released by the Federal Reserve, total credit rose by $20.8 billion, an annualized rate of 6.6%. Analysts had expected an increase in the neighborhood of $18 billion. It was the largest increase in overall consumer indebtedness since last year’s holiday season.
American household debt hit an all-time high in the second quarter of 2017, with increases in every major category, from credit cards, to student loans, to mortgages.
We live in a world full of bubbles just waiting to pop.
We have reported extensively on the stock market bubble, the student loan bubble, and the auto bubble. We even told you about a shoe bubble. But there is one bubble that is bigger and potentially more threatening than any of these.
The massive debt bubble.