Consumer debt climbed to a new record once again in April. The question is how much money can American consumers borrow before the bubble pops?
Americans borrowed money at the fastest pace in five months in April, according to the latest Federal Reserve Consumer Credit Report. Total consumer credit increased by $17.5 billion. That’s an annual growth rate of 5.2%
Americans currently owe nearly $4.07 trillion.
The consumer debt figures include credit card debt, student loans and auto loans, but do not factor in mortgage debt.
Americans charged up their credit cards in April. Revolving credit outstanding climbed by $7 billion, a 7.9% increase. It was the largest increase since November.
Mike Adams exposes the agenda of the private Fed as a war against the prosperity of Americans who simply want to make America great.
The mainstream narrative is that “Americans feel more comfortable taking on debt.” Of course, nothing in the statistics proves this. It is just as likely consumers are running up their credit card balances because they can’t afford to pay their bills.
If Americans are working, earning more and enjoying the benefits of tax cuts, why are they running up the credit cards? It seems just as likely they are charging it because they can’t make ends meet. And what happens to the US economy when the credit cards get maxed out? At some point, Americans have to pay back all of this debt.
The Fed’s monthly consumer credit report does not include data on credit card delinquencies, but as we reported last month, subprime credit card charge-offs remain at levels reminiscent of the Great Recession. In other words, borrowers at the lower end of the income scale are already having trouble making ends meet.
Non-revolving credit, which includes auto loans and student loans, rose $19.5 billion, an increase of 4.2%. Lending by the federal government – primarily student loans – was up by almost $1 billion before seasonal adjustments.
And as with credit cards, we’ve seen a spike in the number of Americans struggling to make payments, particularly in the subprime market. As we reported last month, Auto loan delinquencies have surged to the highest level since 2011 and are approaching levels seen at their peak during the Great Recession.
The central bankers don’t talk about it publicly very often, but the ever-increasing levels of debt have to have some influence on the Federal Reserve’s monetary policy. The central bankers depend on easy money and credit to keep the bubble economy inflated. Peter Schiff has talked at length about the fact that the Fed will have to cut interest rates and launch additional QE to keep the stock market from crashing. The central bank may well also need to push rates lower in order to keep the consumer borrowing train on the tracks. That’s the whole point of loose monetary policy and it helps explain the “Powell Pause.” The Fed simply can’t raise interest rates to anything resembling normal with Americans making payments on over $4 trillion in debt. That train can only rumble down the tracks for so long. At some point, the debt bubble will burst.
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