American consumers ran up more debt in December, wrapping up a year in which consumer debt increase at the fastest pace in five years.
This could prove problematic for the Federal Reserve as it contemplates raising interest rates.
The Treasury added almost $400 billion of debt in January, the third most since July 2020. As the month closed out, the national debt eclipsed $30 trillion.
The other two larger debt increases both came right after the debt ceiling was raised. Perhaps most important is the fact that almost $200B of the newly added debt was in short-term Bills (turquoise below).
The Federal Reserve is talking about raising interest rates. But the US economy is buried under piles of debt. I’ve been asking how this is going to work for months. Apparently, the question has finally occurred to the mainstream.
A CNBC article declared, “Fed rate hikes will intensify a global debt crisis, research warns.”
The Federal Reserve is talking about raising interest rates. Well, that’s going to be a big problem for American consumers who are running up debt at a torrid pace. This is yet another reason why the Fed can’t do what it’s claiming it will do.
Consumer debt jumped 11% year-on-year in November, according to the latest data released by the Federal Reserve. It was the biggest single-month jump in consumer debt in 20 years.
The debt ceiling was raised in December and the Treasury responded immediately, adding $709 billion in debt over the month.
To be fair, $470 billion of this was non-marketable, as shown below.
Note: Non-Marketable consists almost entirely of debt the government owes to itself (e.g., debt owed to Social Security or public retirement)
Labor market productivity has been dropping for decades. And you can trace the plunge back to the demise of the gold standard.
US labor market productivity plummeted in the third quarter of 2021. Revisions to the data showed a 5.2% drop in productivity, even worse than the dismal initial reading last month. It was the worst productivity decline since 1960.
In October, retail sales surged much higher than expected, rising 1.7%. The mainstream gushed over retail spending, asserting that it was a sign that the economy is booming. At the time, I argued that it wasn’t necessarily good news.
Well, the news just got even worse. Retail sales in November disappointed, despite another big surge in inflation.
American consumers piled on more debt in October as inflation continues to squeeze their pocketbooks.
Consumer debt grew by $16.9 billion, an annual increase of 4.6% (seasonally adjusted), according to the latest data released by the Federal Reserve. That raised total consumer debt to over $4.38 trillion.
It appears American consumers are going to have a red Christmas this year.
Red — as in going deeper into debt.
Retail sales surged at a higher than expected rate in October, rising 1.7%.
The mainstream reported this as fantastic news signaling a strong economy. American consumers are out there buying lots of stuff. The stock market rallied and gold fell.
But the mainstream narrative isn’t giving you the full picture.
