Don't look now, but consumer credit in the US has slingshotted back to new all-time highs while savings rates hit levels not seen since 2008 as Americans attempt to deal with the mounting pressures created by high and rising price inflation of essential goods. As we mentioned last week, these indisputable facts fly in the face of recent comments from President Biden that attempted to gaslight the American public into believing that credit exposure are relatively low and savings rates are relatively high.
These figures point to the rising desperation throughout the American economy which seems primed to be exacerbated as a recession seems to be on the horizon and may be made apparent as early as the end of July. At which point the business sector will react with austerity measures that push more people out of the job market and into a world with steadily rising energy and food costs that cannot be easily reversed due to systemic supply chain disruptions. A precarious predicament at best and the set up for a violent doom loop at worst.
If a recession hits, a wave of people living in high rise apartments or starter homes who make low six-figures while still living paycheck to paycheck and using credit cards to afford a life of relative comfort get laid off, and are forced into a market experiencing rare price inflation thing could get... ugly. Demand would immediately collapse, there would be a fire sale on real estate, and credit card delinquency rates would begin to accelerate, which would put an immense amount of pressure on an already unstable credit system.
We truly hope the worst case scenario doesn't play out, but after looking at the data above and coupling that with the unsolved issues on the supply side of essential goods at the bottom of Maslow's Hierarchy of Needs it is hard not to let the mind wander into a dark place. We'll keep you freaks abreast of these trends as they continue throughout the Summer.
Baby number two arrives in the morning. God is good and my wife is a saint.