A Life Preserver for Drowning in Debt & Inflation

Americans are drowning. 

A Life Preserver for Drowning in Debt and Inflation.

That’s the conclusion based on a new report that was released by the New York Federal Reserve last week. 

According to the report, household debt in the United States surpassed $16 trillion for the first time ever in the second quarter. 

That’s about $50,000 for every man, woman, and child in the country. 

That number is up about $312 billion, or 2%, from just the previous quarter. 

And much of the increase came from mortgages and vehicle purchases. 

It’s $2 trillion more than what was recorded just before the beginning of the pandemic. 

So people have been borrowing more money, and much of that increased borrowing is because of higher prices. 

Even if prices have cooled down in some areas, inflation is still taking a bigger chunk out of budgets than it was a year ago. So people all over the country are doing what they have to just to keep their heads above water. 

The unfortunate reality of that means putting more expenses on credit cards. During this time where the household debt rose, part of that narrative was credit card balances going up by $46 billion. That’s one of the largest increases on record since 1999. 

And those credit card balances joined auto and student loan debts to mark the largest increase in non-housing balances since 2016, at $103 billion. 

This all comes at a time when the Fed has been raising interest rates to try to battle inflation. And while consumer spending is up (people still need to eat and fuel their cars, after all), sentiment is still down and continues to sink. 

If you haven’t drastically changed your spending habits these past few months, you undoubtedly know someone who has. It’s a slow-spreading contagion that seems like it’s going to affect everyone in some way or another before things begin to turn around. 

In the meantime, you’re going to see more household debt. More of an economic slowdown. More people getting by with less. 

Because as the essentials go up in price, consumers are going to worry less about things like new clothes, gadgets, recreational travel, and other areas of discretionary spending. 

That reality is staring us in the face and has been for months, even as the nation’s leadership assures everyone that everything is fine.

There’s no telling just how bad this is going to get, how long it’s going to last, or how severely the average person will be affected. 

The only sure thing about all of this is that we’re only in the beginning stages of it. 

As the Fed continues trying to find a way out of this, and the country’s leaders insist there’s nothing wrong, the people are going to have to find their own life preservers. 

That means managing your capital yourself and navigating this turbulent market for opportunities that can help you thrive. 

Despite what you may be seeing out there, there are a few sectors worth paying attention to for investing. Putting your money into them now will pay massive dividends when the next cycle starts and the markets begin to turn around for the better. 

A newly-released report shows you a blueprint for the current market so that you can build a secure financial future that works for you. 

The market conditions we’re seeing are going to be here to stay for a while. 

It’s up to you to take the steps needed to protect your wealth in the meantime.
 

Ryan Stancil

Ryan Stancil
Editor, Daily Profit Cycle