Consumers continued to pile on debt in August, according to the latest data released by the Federal Reserve. But credit card debt fell slightly, raising a troubling question: are consumers close to maxing out the plastic?
Total consumer credit grew by another $17.9 billion in August. That represents an annualized increase of 5.2% and pushes total consumer indebtedness to a new record of $4.14 trillion (seasonally adjusted).
The federal government continues to pile up debt at a staggering rate. In August alone, the US government added $450 billion to the national debt. But Uncle Sam isn’t the only one who doesn’t have enough money to pay his bills. Forty state governments are also drowning in red ink.
Total state government debt now stands at $1.49 trillion with 40 states lacking sufficient funds to pay their bills according to Truth in Accounting’s (TIA) Financial State of the States report.
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.”
Peter Schiff appeared on RT Boom Bust on Tuesday (Sept. 17) to talk about interest rates, gold and the dollar. Peter said the fiat currency system may not survive the next recession.
The conversation started focusing on the repo operations conducted by the Federal Reserve early in the week, Peter said the financial media and Wall Street are being much too complacent about what’s going on.
Corporations are piling on the debt.
Last week, companies borrowed $74 billion in the US investment-grade bond market. It was the largest corporate debt increase for any comparable period since they started tracking such things in 1972.
Gold has had a pretty solid month, but silver has been going up like it’s on rocket fuel.
In this episode of the Friday Gold Wrap, host Mike Maharrey takes a close look at the silver market and what’s going on there. He talks a little trade war, saying that maybe we shouldn’t be talking so much about the trade war. And he also touches on some economic news that came out the week.
Earlier this week, Spencer Schiff wrote an article noting the importance of consumer spending to the US economy and the consequences that will follow if Americans suddenly tighten up their wallets. Schiff isn’t alone in his concern. A mainstream economist sounded a similar warning during a recent CNBC interview.
This week has been relatively quiet in the markets. Gold has drifted up and down as traders wait to see what kind of message Fed Chair Jerome Powell will deliver during his Jackson Hole speech. In this episode of the Friday Gold Wrap, host Mike Maharrey covers some tidbits of news and speculates about what Powell will say. Then he pivots and talks a little bit about President Trump and the strange economic tightrope that he’s trying to walk.
Last week we got the updated federal budget deficit numbers. At $867 billion, the 2019 fiscal year budget shortfall has already eclipsed last year’s deficit of $779 billion.
The out of control spending and spiraling deficits are concerning enough on their own terms, but they become absolutely horrifying when you consider that these budget shortfalls are happening during an economic expansion. You would normally expect numbers like this during a major recession.
That raises an important question: what’s going to happen when the recession hits?
While President Trump nags the Federal Reserve to reinstitute Obama-era monetary stimulus, China has already taken off down that path. And it actually has some people in the mainstream concerned.
According to a Reuters report, the Organisation for Economic Cooperation and Development (OECD) is warning that while Chinese government stimulus may boost the country’s economy in the short-run, it “may undermine the country’s drive to control debt and worsen structural distortions over the medium term.”
