Are we in a recession? Why Is Credit Card Debt Growing So Fast? |Notice

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Readers of The New York Times must have felt relieved on the morning of November 15, 1929just two weeks after a historic stock market crash, to read a summary of the Department of Labor’s latest monthly jobs report.

“American industry is fundamentally sound and undisturbed by recent financial upheavals,” he said. “The stock market crash has not resulted in reduced employment… (and) it could bring more money for industrial development.”

The market had collapsed on October 28 and 29. It was just the beginning. In 1932, it would have lost 89% of its pre-crash value. It will be 12 years before the economy recovers, as the nation unites to fight World War II. The market would not reach its pre-crash peak until November 1954. Nothing about the economy at the end of 1929 was “sound and quiet”.

The assessment of experts and government officials is not always reliable.

Americans today have not experienced a stock market crash. It’s more like a steady stream, much like the Mississippi River starts out as a stream out of Lake Itasca in northern Minnesota.

To end of Junethe S&P 500 index had lost 20.6% over the year, while the Nasdaq lost almost 30% and the Dow Jones Industrial Average almost 15%.

All have rebounded a bit since then, but all are still well below their January levels.

And yet, the economy is sending mixed signals. As The Associated Press reported recently, he is “stuck in an uncomfortable and painful place. Confusing, too.

Hindsight is always much easier than trying to guess what will happen next. If officials in the late 1920s missed the coming tsunami of misery, observers today are simply confused. But for consumers, confusion should be cause for caution and caution. Unfortunately, the opposite seems to be happening.

A new study by the Federal Reserve Bank of New York’s Center for Microeconomic Data found that Americans increased their credit card balances by a cumulative 13% year over year in the second quarter. Credit card debt rose $46 billion in this quarter alone, one of the biggest increases since 1999. according to fortune.

For those under 25, credit card balances increased 30% and 25% for people with low credit scores, Fortune said.

If you’re interested, Utah has the 18th highest credit card debt in the nation, according to Personal Finance. WalletHub websitewith a median debt of $2,225.

Experts say inflation is to blame. People are covering higher prices for gas, food and other items with their plastic chopsticks. Maybe, but poor financial habits may be a more likely culprit.

So far, anyway, this strategy is working. Morningconsult.com says our balance sheets are good. Federal Reserve figures show “net wealth as a share of disposable income is near a record high, and household debt as a share of total assets is at its lowest level in nearly five decades”.

But this may just be another aspect of the current economic confusion. The nation has just registered its second consecutive quarter of negative economic growth, which is one of the markers of a recession. However, the Labor Department said July was a record month for employment, with businesses adding 528,000 new jobs. Yet many companies in the tech industry are laying off workers, as are retailers like walmart.

Inflation is higher than it has been for 40 years, which has led the Federal Reserve to raise interest rates. And every increase in interest rates makes it even more difficult to pay off credit cards or buy a house.

And yet, consumer spending remains strong.

“Today we see consumers resorting to credit cards to cover their expenses in the face of rising prices for basic consumer goods such as food, gasoline and housing,” Vaneesha Boney Dutra, Associate Professor of finance at the University of Denver, told Wallethub. “I expect this trend to continue until inflationary pressures ease.”

Or until payments get too high or jobs disappear.

It’s nice to have the luxury of 90 years of history with which to see just one horribly wrong prediction about the economy at the start of the Great Depression. We don’t have that with today’s economy. No one knows for sure what’s coming, just that it’s not a good time to rack up credit card debt.

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