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re: I can’t help but think a lot of people driving newer cars with upside down loans
Posted on 5/8/24 at 8:58 pm to cgrand
Posted on 5/8/24 at 8:58 pm to cgrand
quote:
except none of those things are happening currently
Unemployment is slowly moving up, economic growth slowed tremendously from Q4 to Q1 and inflation has moved up every month this year (thus far).
Now let's look at the environment that's happening in:
Consumer debt at record highs ( household debt and credit report, Credit Cards and Other Revolving Plans, All Commercial Banks )
Interest on consumer debt at record highs LINK
Real Wages slowing ( actually dropping for production and non-supervisory personnel)
Personal savings dropping for a year now ( LINK)
Much of GDP's growth over the last year has been on the backs of consumer credit cards as they've continued trying to offset inflation with them. As their savings dry up and they become more and more delinquent, that's going to cut into GDP, which will cause more job cuts. As Unemployment rises, wages drop as the competition for workers cools off. Those workers will then have less money to service their high interest rates but there's still too much money in the economy so inflation continues to stay sticky above the 2% threshold (thus the Fed won't lower rates for a while). The problem is: when.
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