Consumers are more financially strapped than thought!

 

Unfortunately, we saw that U.S. Consumer Debt rose again in February apparently, those redundant massive stimulus checks were not enough, a strange development. American consumers pulled felt the need to pull out their credit cards and ran up more massive balances in February and this surge in credit card spending should came as a surprise.

·         American consumers have piled up over $4.23 trillion in debt. This is slightly higher than the record $4.20 trillion in consumer debt as reported in February 2020 as the Covid-19 pandemic began to grip our nation.

According to the latest numbers from the Federal Reserve, consumer debt unexpectedly rose in February, and the trend is growing at an annual rate of 7.9%.  The $27.6 billion increase in consumer debt in February was the largest jump since November 2017. The FED consumer debt figures include credit card debt, student loans and auto loans, but do not factor in mortgage debt. The report showed that revolving debt, primarily reflecting credit card spending, jumped 10.1% in February. Americans now owe approximately $974.4 billion in credit card debt...what will be the next MMT bailout, forgiveness of this debt?  Credit card balances were over $1 trillion when the pandemic began. Many of the so called “CNBC” pundits take renewed consumer borrowing and spending as a sign the economy is almost fully recover. What a farce, as to me it appears that American “drunken-spending” consumers are running low on free-easy stimulus money. As a result, they are now having to spend money the old-fashioned way, they' “charge it” In other words, the sudden explosion in credit card spending are likely indicating real consumer stress.

 

This is exactly what the “BS” central bankers at the FED have stated that they want to see, more to see more borrowing and spending. FED Governor Lael Brainard spun the “strong” consumer credit / debit, numbers as good news (what a shame). She stated that we are seeing the kinds of financial conditions broadly that are very consistent with supporting the flow of credit to businesses and to households; I may have to go back to economics 101. As in my opinion building an economy (or economic data) on debt isn't smart or sustainable and this entire “BS” recovery is predicated on increased consumers spending toe massive amounts of stimulus which is just money borrowed (more and more taxpayer debt) and handed out by the federal government basically running up their own real-life debt-loads. When we dig into the numbers, they, unfortunately, reveal some disturbing trends that the FED-heads would prefer not to think about.

·         Loans valued at $2 trillion entered forbearance during the pandemic. 

·         As of the end of 2021/Q1, over 60 million Americans had skipped over $70 billion in debt payments that they owed. At some point, they will be forced to pay the bailout piper.

·         Meanwhile, almost 1-in-6 subprime auto loan borrowers are 60 days or more late on payments. That is the highest number on record.

·         There are also signs developing within the Hot housing market. Subprime mortgage delinquencies remain near record-high levels. And the full extent of the contagion is masked by massive forbearance programs.

·         In the stock investment world, margin lending has surged. As of late February, investors had borrowed a new record $814 billion against their portfolios, according to data from the Financial Industry Regulatory. Margin lending rose at the fastest annual rate since 2007 and it's up 49% from the previous highs last year.