Debt striking close to home
U.S. household debt is at an all-time high.
Showing steady declines between 2008 and 2013, consumer debt hit an astounding $13.2 trillion at the end of the first quarter 2018. And household debt is rising at a rate 60 percent higher than the increase in wages.
Moreover, personal loans are the fastest growing consumer debt category, according to a report by TransUnion, the credit tracking agency. And outstanding personal loan balances now stand at $120 billion.
This stat shows that consumers are looking for ways to consolidate and pay off their debt, which will come at the expense of buying homes, cars, etc.
Indeed, housing demand recorded its biggest drop in two years, with a 9.6. percent decline in June year over year. And auto sales, according to the latest numbers, dropped 3.7 percent in July.
Further, Americans today owe 26 percent of their income to revolving credit debt, they have less and less cash to spend. Especially if gas prices increase sharply, money spent on retail or entertainment and leisure, will go into the gas tank.
Today, four in every ten adults are not able to cover a $400 emergency expense. And more than 50 percent of all consumers are struggling to cover such basic expenses as rent and food. TJ
Rising interest rates will intensify the debt load on consumers, and significantly cool spending in several sectors, including retail, travel, restaurant and leisure.