Middle Class Death Spiral: Consumers Have Never Been In More Debt, And Bankruptcies Are Surging
Middle Class Death Spiral: Consumers Have Never Been In More Debt, And Bankruptcies Are Surging by Michael Snyder for The Economic Collapse Blog
This wasn’t supposed to happen. During the relative economic stability of the past few years, the middle class was supposed to experience a resurgence, but instead it has just continued to be hollowed out. The cost of living has risen much faster than wages have, and as a result hard working families all over America are being stretched financially like never before. Even though most of us are working, 59 percent of all Americans are currently living paycheck to paycheck, and almost 50 million Americans are living in poverty. In a desperate attempt to continue their middle class lifestyles, many Americans have been piling up mountains of debt, and it has gotten to the point where we have a major crisis on our hands.
According to the New York Post, the total amount of debt that U.S. households have accumulated is about to cross the 14 trillion dollar mark for the first time ever…
Meanwhile, record American household debt, near $14 trillion including mortgages and student loans, is some $1 trillion higher than during the Great Recession of 2008. Credit card debt of $1 trillion also exceeds the 2008 peak.
Americans are spending heavily, again — and often recklessly, say analysts.
This is the exact opposite of what U.S. consumers should be doing. We can see signs of a fresh economic slowdown all around us, and consumers should be feverishly trying to get out of debt as fast as they can.
But instead, debt levels just keep setting record after record. In fact, total student loan debt just hit a brand new record high of 1.605 trillion dollars, and auto loan debt just hit a brand new record high of 1.174 trillion dollars.
It would be one thing if we could handle all of this debt, but that isn’t the case. Bankruptcies have been steadily rising, and according to the latest figures the number of bankruptcy filings shot up another 5 percent in the month of July…
Bankruptcy petitions for consumers and businesses are on the rise. There was a 5% increase in total bankruptcy filings in July 2019 from the previous month, the American Bankruptcy Institute said this week. There were 64,283 bankruptcy filings, up from 62,241 for the same period last year.
Unfortunately, this is probably just the beginning.
Right now, most of the country is living on the edge financially, and so a major economic slowdown would inevitably cause another enormous tsunami of consumer bankruptcies like we saw in 2008.