There's a warning sign in this otherwise hot economy

[IronLionZion]

https://www.washingtonpost.com/opinions/2023/03/08/economy-recession-consumer-debt-loans/
Gift Link: https://wapo.st/3L51Yxj



Americans are piling on debt again. Credit card debt is at an all-time high. A record number of people are paying more than $1,000 a month on auto loans, and nearly every online store is luring customers in by promising they can “buy now, pay later.”

This is a problem because a lot of people no longer have the money to pay back what they’ve borrowed.

Nearly 25 million people are behind on their credit card, auto loan or personal loan payments, according to a Moody’s Analytics analysis of Equifax data. The nation has not seen anything that high since 2009 in the midst of the Great Recession. It’s a warning sign in this hot economy.

It’s plausible the situation could deteriorate, especially if a recession arrives. Many households are also behind on their utility bills: 20.5 million homes had overdue balances in January, according to the National Energy Assistance Directors Association. The number of households applying for help to pay their utility bills is the highest it has been since 2011. Families are already making difficult choices about cutting food or medicine or heat from their budgets. If job losses climb, many will likely lose cars or homes.

There’s a confluence of factors driving this: Inflation remains stubbornly high, generous government support during the pandemic is ending, some families overspent and used car prices dropped so some owe substantially more than a car is worth. There was also a quirk in which many low-income borrowers suddenly had higher credit scores in recent years as they paid off debt. Now lenders are no longer as lenient. The grace periods are getting shorter.

This sounds like a recession indicator for the lower income people in our economy. It's likely to spread to the middle class soon. Wealthy will be fine of course. They got massive tax cuts.

[Skittles]

1. when I see the prices in stores

I cannot help but think of the less fortunate.......I donate regularly to my local food bank, I know there's a lot of people hurting out there

[IronLionZion]

2. Donating money to food banks helps both farmers and less fortunate people

Food banks can buy a ridiculous amount of perishable goods from farmers. They buy up surplus crops of any type at low prices before it goes bad.

[Skittles]

4. am always happy to help farmers

my grandparents were farmers

[IronLionZion]

3. "only one surprise car problem, health issue or home repair away from financial disaster"

More Americans are closer to becoming broke than they might expect or be prepared for.