Credit card debt set to hit record levels as consumer holiday spending rises

[BumRushDaShow]

Source: CNBC

Published Fri, Dec 27 2024 10:21 AM EST


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. “Job and wage gains, modest inflation and a heathy balance sheet have led to solid holiday spending,” the NRF’s chief economist, Jack Kleinhenz, said in a statement.

But other reports show that many shoppers are increasingly leaning on credit cards to manage their holiday purchases. To that point, 36% of consumers have taken on debt this season, a recent report by LendingTree found. And those who dipped into the red racked up an average of $1,181, up from $1,028 in 2023, according to the survey of more than 2,000 adults.

“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. “Inflation is still a big deal in this country, and it’s having a huge impact on people’s finances, including their holiday spending,” he said.

Read more: https://www.nbcnews.com/business/personal-finance/credit-card-debt-set-hit-record-levels-consumer-holiday-spending-rises-rcna185562

[nmmi]

1. Heading into the peak holiday shopping season, credit card balances were already 8.1% higher than a year ago,

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.

[Bluetus]

2. We are in late stage capitalism

There is no clear definition of this phase because capitalism has never made it this far before. But I would offer some characteristics that I think historians will note when they write about the end of the capitalism era that roughly began with Adam Smith. Coincidentally, his "Wealth of Nations" treatise was published in 1776. Does that year ring a bell? IN other words, the history of capitalism tracks directly with the history of America politics.

Anyway, here are some things I think historians will consider pivotal changes that brought us to the end of capitalism:

1) While fiat currency is an essential part of capitalism, there comes a point where the money supply, in parallel with the debts governments take on, become nonsensical -- so large as to have no real connection with any real-world productive activities.
2) Obscene levels of wealth concentration. 700 US billionaires have more wealth than the bottom 50% (the bottom 170 million) COMBINED.
3) Monopolies or strong oligopolies in most major industries, leading to rampant price-gouging.
4) The richest 0.1% plowing vast amounts of money into the electoral system, allowing them to essentially control all important government decisions.
5) The richest people and corporations gaining control over the majority of the major media outlets and actively using that to propagandize in favor of their personal interests.
6) Success in business no longer a function of innovation, hard work or technology breakthrough, but now primarily a result of crony connections with people running the government.
7) Fixation on imaginary or intangible things (cryptocurrency, NFTs, insanely valued stocks), leading to a runaway "wealth effect".

On the at last point, the real economy has been good after recovering from COVID, and that alone produces good consumer confidence. But what we have here are stock markets that are insanely inflated, not coincidentally, but the richest of the billionaires, most notably Musk, Bezos, Ellison, Zuckerberg et al. We see Tesla stock valued 20x higher than any car company even though the companies margins are mediocre and they no longer have much growth. We see similar patterns with NVDA, NFLX and other companies that are so fabulously valued that they now distort the stock indexes.

This adds to the "wealth effect" where people with investments feel like they are prosperous. But what goes up can come tumbling down. With such financial insanity (buy an imitation Trump faux-Gibson guitar worth $50 tops for $10,000), it will not take much for the bubble to burst. And when that happens, the collapse of this astronomical wealth effect could easily send us into recession. And these increasing levels of credit card debt are a very ominous sign.

[hunter]

4. Once upon a time I paid some medical bills with a credit card.

I won't do that again!

Since then I've got no desire to buy anything with a credit card.

It shouldn't be a surprise, but a serious illness tends to reduce the amount of money you are making, which makes it difficult to pay the credit card bills. You miss a few payments, because you've got even more medical bills to pay, the late fees and interest rates rocket up to thirty percent and beyond, and then you are screwed. The credit card companies are not your friend.

Anyone who does not, or can not, pay their credit card debts in full every month is playing with fire.

[Aussie105]

5. At least you will save on electricity.

All those overheated credit cards you have - bring them out and turn off the light and heating, the glow from those cards will light up and warm your room!

Yes, I'm being arrogantly critical and critically arrogant.
My single debit card didn't get a Xmas dent in it.

The billions spent over Xmas - I guess there is no breakdown of how much of that was real money, or 'future' (ie debt) money.
The shops don't care, and the banks just love all those 30% interest bills!

[uncledad]

6. "Prices are still really high and that means that lots of Americans simply didn't have any choice"

"Americans simply didn’t have any choice,” said Matt Schulz, LendingTree’s chief credit analyst" Wow that is some bullshit there. The only thing you are forced to buy in this country are necessities. If the price of crap for Christmas is too high for you to afford then just buy less crap.

[republianmushroom]

7. There will be a reckoning sooner ot later.