The fiscal irresponsibility of Americans continues to run wild as the economy worsens. It was recently reported that credit card debt nationwide totals over $1 trillion, but now there are even more troubling problems. More Americans are maxing out their cards, and delinquency rates are rising.
To break it down easy, people are just spending without paying any of their actual bills. Which is a crazy thing to consider, given how poorly the economy has been under the Biden Administration. But, then again, maybe that is why people want to spend, to make themselves feel better.
Economist Ray Perryman says none of this trend is particularly surprising.
"A lot of people had liquidity after the pandemic, which is being dissipated with people wanting to maintain their lifestyles," he says.
Now, credit card debt is nothing new, and is not going to be the reason the economy caves. It is more of a troubling statistic of fiscal delusion or illiteracy.
That is also something not particularly new.
"By and large, over our entire history...Americans generally spend all of what they make," he says.
We spend what we earn in a paycheck on luxuries, then refuse to pay the bills. That is a prime example of financial illiteracy, which is something we have passed down generations.
Meanwhile schools would rather make you learn calculus instead of teaching something useful, like financial responsibility classes. Which is a shame, because the next generation is going to have some tough times.
"Youa re going to see more pressure on them to manage their own retirements...social security will be under pressure, not adequate enough for their needs," Perryman says. "So, there is a need to develop financial literacy more now than there ever has been in the past."
The average rate of 30-day-plus delinquency across the five big lenders jumped 0.16 points from September to October, above the typical seasonal jump of 0.06 point. Net charge-offs bumped up 0.77 points, compared with a typical 0.18-point typical increase.
This trend has settled in for the foreseeable future too.
"I think we are going to see people continue this for at least the next six to eight months," he says.
Perryman's only advice is, while you can enjoy your holiday season, stay aware that the bills are due the next month.