Is debt a risk for our economies?
Here are some recent news and posts about debts in the economy?
Essentially, we are looking at debts affecting these 3 groups namely, consumer, corporation and governments.
DEBTS IN A GLANCE
HOUSEHOLD DEBT AND CREDIT REPORT (Q2 2024)
Household Debt Ticks Up to $17.80 Trillion in Second Quarter; Mortgage Originations Remain Low
Total household debt rose by $109 billion to reach $17.80 trillion, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances were up $77 billion to reach $12.52 trillion, while auto loans increased by $10 billion to reach $1.63 trillion and credit card balances increased by $27 billion to reach $1.14 trillion. The volume of mortgage originations remained low, primarily due to subdued refinancing activity. Homeowners continued to increase balances on home equity lines of credit (HELOC) as an alternative way to extract home equity; HELOC limits rose by $3 billion, marking the ninth consecutive quarterly increase. Aggregate delinquency rates remained unchanged from the previous quarter, with 3.2 percent of outstanding debt in some stage of delinquency.
CORPORATE DEBTS
As per Q2/2024, corporate debt hit a record of $13,870 billion. At this heightened interest rate environment, this is weakening the profits.
GOVERNMENT DEBTS
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US national debt JUMPED $345 BILLION in 3 days and hit a WHOPPING $35.7 TRILLION, a new all-time high. Since 2020, federal debt SKYROCKETED by $12.5tn while the US GDP by $7.1tn. Debt is rising almost TWICE as fast as the economy. - X user Global Markets Investor
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Federal Reserve posted its biggest loss in history of $114 billion last year.
Should this be of concern for us? Will this be a concern if they can print money?
Should this be a concern for the citizens, corporates and governments?
Let us look at some notable debts, starting with credit card.
How long more before households are crushed under a 28% credit card interest rate? - Forbes
Real estate debt bubble in the US in 2007 looks almost cute in this chart. - X user Michael A. Arouet
US household debt to disposable income is 97% compared Australia’s 184.7% and Canada’s 175.1%. In a heightened interest rate environment, its severity is heightened in the market.
Delinquency rates of office mortgages backing commercial mortgage-backed securities (CMBS) spiked to 8.4% in September - Wolf Street
Berkshire is sitting on cash pile of over $200 billion. From the above Yahoo Finance news article, Elon Musk has suggested a market correction.
My muse
One man’s debt is another man’s asset. - Ray Dalio
Debt could be one of the potential downfalls of America. There are $10T worth of USA treasury assets due for refinancing in 2025. There are over $1T worth of commercial mortgages due for refinancing in the coming months. The amount of interest paid to service the Federal debt will exceed that budget set for defense, falling behind social security. Without adequate investment into infrastructure, education, healthcare, defense and other strategic sectors, can America maintain her edge? Why are they borrowing money from the future to fund the present operations?
We need leaders to address this and change the trend of debt for the countries. Whatever happened to America can cause rippling effects to other countries.
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- breAkdaWn·10-06TOPdebt is a good look for the present government, till they pass it on to the next1Report