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Bidenomics Claims Clash With Soaring $1 Trillion Credit Card Debt

US President Joe Biden’s recent Philadelphia address extolling his “Bidenomics” policies and commitment to strengthening the middle class has encountered a stark reality check.

Fresh data from the US central bank paints a sobering picture, as American credit card holders find themselves in uncharted territory, grappling with an unprecedented $1 trillion in debt – a historic first as reported by the Federal Reserve Bank of New York.

The Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit reveals a complex web of financial challenges. Despite President Biden’s optimistic outlook, the reality on the ground reveals an increasing reliance on credit, largely driven by escalating prices for essential goods. The data, drawn from the New York Fed’s Consumer Credit Panel, exposes a surge of $45 billion (nearly 4.6%) in credit card balances during the second quarter of 2023, culminating in a staggering $1.03 trillion. When combined with auto loan balances, total household debt escalates by $16 billion (0.1%), reaching a towering $17.06 trillion.

The numbers are telling:

  • Mortgage balances end at $12.01 trillion as of June.
  • Newly originated mortgage debt records $393 billion in Q2 2023.
  • Auto loan balances experience a $20 billion upswing.
  • Other balances, encompassing retail cards and other consumer loans, rise by $15 billion.

This surge in debt prompts scrutiny of President Biden’s “Bidenomics” narrative. As credit card accounts expand by 5.48 million within the cited timeframe, indicating approximately 2 credit cards for each adult in the nation, the report highlights an unsettling trend. Average delinquency rates for auto and credit card payments reach their highest levels since the first quarters of 2018 and 2012 respectively, according to New York Fed data.

Against a backdrop of historically high interest rates, as enacted by the Federal Reserve to counter relentless inflation, economic experts underscore the profound impact on consumers. As rates influence mortgages and credit cards, financial burdens amplify, particularly affecting households with tighter budgets. An average credit card now carries an interest rate of 20.53 percent, as per Bankrate.

Signs of financial distress extend further as individuals resort to withdrawals from employer-sponsored 401(k) plans. Bank of America’s report reveals a 36 percent rise in withdrawals during Q2 2023 compared to the previous year, reflecting growing economic uncertainty.

With the resumption of federal student loan payments looming and inflationary pressures persistent, economic forecasters predict constrained budgets and reduced consumer spending. The economic landscape challenges President Biden’s “Bidenomics” aspirations, prompting growing skepticism among the American populace.

As “Bidenomics” faces its litmus test, the disconnection between presidential accolades and economic reality becomes increasingly evident. The complex interplay between policy, financial dynamics, and public sentiment shapes a narrative that demands careful consideration and scrutiny.

Check out other articles in our Economy section.


#Biden #Bidenomics #inflation #economy #employment #US #recession #inequality #creditcarddebt #mortgagecrisis #interestrate #studentsloans #autoloans

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