Dear Reader,
Today we’re going to talk about the consumer, credit standards, and what it means for the economy.
Big Picture:
Credit standards are continuing to deteriorate. Unfortunately, we’re not seeing things get much better, in fact, they’re getting worse.
U.S. retail sales increased .5% over the last year, which is the lowest growth rate since May 2020, and well below the historical average of 4.8%.
It’s not a surprise, because real wages are down for the 25th consecutive month.
Credit card interest rates have crossed above 20% (U.S. average), which is the highest rate we’ve ever seen, and 5.5% above the rate we saw just a year ago.
What it Means for You:
People are changing their spending patterns, which isn’t a surprise with inflation and real wages continuing to decrease.
Credit card balances in the U.S. increased 17% over the last year, which is the biggest spike since the 2001 recession.
Not only are credit card balances increasing, but the rate that you’re being charged on that balance is also increasing exponentially.
The summer months are usually when people open up their pocketbooks a bit more for vacations, family trips, and entertainment.
While that will still happen to some degree, seasonally-speaking it will be well below expectations.
What to Watch For:
People are talking about how inflation is improving year-over-year, but remember that inflation is compounding.
When you look at month-over-month, inflation has not gone down.
For three years, we’ve had consistent price increases month-over-month.
The pressure is real, and this is why we think there’s a bigger hit to the U.S. economy as we go into the second half of this year.
We hope you enjoy the video here.
Kind regards,
Freedom Financial News
