John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website DollarCollapse.com in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.
The money Americans saved during the pandemic is gone. And for many, that now means borrowing to make ends meet.
(CNBC) – Heading into the holidays, many Americans were already saddled with record-breaking credit card debt. And yet, consumer spending is set to reach a fresh high this season.
The National Retail Federation reported last week that spending between Nov. 1 and Dec. 31 is “clearly on track” to reach a record, between $979.5 billion and $989 billion.
Heading into the peak holiday shopping season, credit card balances were already 8.1% higher than a year ago, according to the Federal Reserve Bank of New York’s report on household debt.
Further, 28% of credit card users had not paid off the gifts they bought last year, according to another holiday spending report by NerdWallet, which polled more than 1,700 adults in September.
“No one should be surprised that so many Americans took on debt this holiday season. Prices are still really high and that means that lots of Americans simply didn’t have any choice,” said Matt Schulz, LendingTree’s chief credit analyst.
Excessive credit card debt means spiking defaults:
(Zero Hedge) – The party is long over for the bottom third of US consumers, as maxed-out credit cards and depleted personal savings have pushed credit card loan defaults to their highest level since the 2008 financial crisis.
Financial Times cited new data from BankRegData revealing that credit card companies wrote off $46 billion in “seriously delinquent loan” balances in the first nine months of the year—an alarming 50% increase from the same period last year and the highest level in 14 years.
Making matters worse, annual percentage rates (APRs) on credit card debt have hit record highs, compounding the financial misery for cash-strapped consumers in the era of failed ‘Bidenomics’.
Corporations Are In the Same Boat
Corporate debt just hit a record, while leveraged loans and high-yield bonds gained market share.
Stocks Have Historically Bad Breadth
Just a handful of Big Tech stocks like Nvidia and Tesla now dominate the market. The current reading is more extreme than that of the dot-com bubble — after which the NASDAQ fell by 80%
And yet…almost everyone from retail investors to hedge funds continues to pile into stocks:
Housing, Meanwhile, Is Frozen
US home sales are lower than in the depths of the Great Recession:
Plunging sales means fewer salesmen. Expect mass layoffs of realtors in 2025:
Here’s a video about how the formerly bullet-proof Texas and Florida housing markets are “melting down.”
What’s Left To Support The Economy?
Government deficits, of course:
To sum up, everyone is borrowing to get by, and the last man standing is the one who’s supposed to protect the value of the currency. Look out below, and keep stacking.
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