In today’s economy, the big spenders known as “YOLO spenders” are racking up a significant amount of debt, causing a financial bubble in the US. Economist David Rosenberg pointed out that the US economy heavily relies on consumer spending, which currently makes up 70% of it. However, the US households’ savings rate is only 3.7%, much lower than the historical average of 9%.
Rosenberg highlighted the issue of consumer debt, revealing that an increase in consumer spending was financed by a staggering $212 billion debt load added by households. This could spell trouble for the US economy if consumers become overwhelmed by their debt.
Despite this, it seems that US consumers are still managing to stay afloat, as their balance sheets look stable for now. However, there are signs of trouble brewing, including a rise in credit card delinquency rates and an increase in missed payments.
Rosenberg emphasized that the current default cycle is a major concern, indicating that it is already here, rather than just looming on the horizon. This situation could potentially have a significant impact on the US economy.
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