(ConservativeJournal.org) – The economy is struggling to carry over $1T in credit card debt after the inflationary fallout from pandemic policies and extreme government spending has strapped the average American for cash. Experts are concerned that the extreme debt load carried by many lower income Americans could eventually cause more extreme problems, especially with student loan debt being a factor in their financial health.
Economist Shernette McLoud with TD Economics said that the economy was performing better than many predicted it would be last year. She credited “a resilient consumer” for the economy exceeding expectations in a report published February 3rd.
The amount of credit card debt held by Americans totaled $1.05 trillion as of the third quarter of 2023, according to data released by the Federal Deposit Insurance Corporation (FDIC). Credit rating organization Moody’s shared data that suggested credit card delinquency rates are above their 2019 numbers with expectations of continuing the rising trend. The charge-off rate, or the percent of the debt expected by the loan issuer to never be repaid, is also on an upward trend.
VantageScore CEO Silvio Tavares said that data indicates “significant signs of stress” among American consumers.
Experts tend to tell the tale of two populations, one of which owns property and has multiple income streams, who have fared relatively well in the post-pandemic period. Everyone else, however, is struggling to pay rent and provide the basics.
Senior Vice President with Moody’s Warren Kornfeld said that lower and middle income Americans were especially devastated by the impact of inflation which is driving increases in debt and credit delinquency. He anticipates the rates to continue to rise over 2024.
Republicans will make a big deal about the floundering economy during an election year, and are already highlighting the juxtaposition between the current economic situation and the economic conditions during the Trump administration.
Tavares said that less affluent and younger Americans were especially hit hard by the pandemic conditions. High interest rates from the Federal Reserve also mean refinancing isn’t on the table, so credit card debt will only continue to accrue throughout the year.
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