Credit card balances are surging. According to FICO, average utilization has climbed from under 30% just a few years ago to over 35% today. These balances aren’t being paid off, and the interest rates on credit cards have only increased. The St. Louis Fed reports that 14% of card debt is now delinquent.
Mortgage stress is on the rise as well. The New York Fed reports that serious delinquencies have increased from approximately 1% to 1.3%. It might not seem like much, but it may very well be an indicator of where we are headed. Auto loan delinquencies are creeping higher, as well. This isn’t prosperity; it’s an indicator that people are still struggling and doing their best to provide for their families.
Grocery prices remain high. It was recently reported that some of the top searches on Google were for “second job” and “part-time work.” Americans are still working hard to stay afloat.
The Federal Reserve has begun to cut interest rates, lowering the benchmark range to 4.0-4.25%. The Fed doesn’t lower rates in a prosperous economy; it takes such measures when growth is slowing or unemployment is rising. Record national debt, which will only dramatically increase, rising delinquencies, high grocery prices, and Fed rate cuts show the economy is struggling, not prospering.
Michael Cruz
Canyon Country
