The media is scrupulously ignoring how bad the American economy currently is, and the dangerous cliff it is heading towards.
Consider the following quick overview. The federal government has amassed a massive debt of approximately $33 Trillion dollars, significantly higher than the entire U.S. GDP of about $23 trillion. The Congressional Budget office reports that there was a $1.4 trillion deficit in the first nine months of FY2023 Under Biden’s Watch. As of July 2023 it costs $726 billion to service the debt, which is 14% of the total federal spending.
It’s not just Washington. Cities and states are reeling under the increased fiscal burden of feeding, housing, medicating and educating the vast numbers of illegal aliens pouring into their jurisdictions.
American households carry a total of $17.1 trillion in debt as of the second quarter of 2023, and the average household debt is $101,915 as of the end of 2022, according to The Ascent financial web site. . Unfortunately, that doesn’t just represent “good” debt, such as mortgage costs. Annutiy.org reports that “Recently, credit card debt has reached record heights. Since the end of 2021, Americans’ credit card debt has increased by $130 billion. That 15% increase is the largest jump in over 20 years. Many experts believe that recent high interest rates have made it much harder for Americans to pay off their existing credit card debt.” It’s the first time credit card debt has risen that high.
The New York Federal Reserve found that “Total household debt rose by $16 billion to reach $17.06 trillion in the second quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances saw brisk growth, rising by $45 billion to a series high of $1.03 trillion. Other balances, which include retail credit cards and other consumer loans, and auto loans increased by $15 billion and $20 billion, respectively. “ The average credit card charges average an extraordinary 20.53% interest rate.
The prospects for families to address that debt are dwindling. Prices have risen dramatically since 2021, and inflation continues to grow. The Washington Examiner notes that
“Overall average prices have already increased by 16% since President Joe Biden took office, but the disproportionate growth in essentials, which comprise a greater share of budgets for lower-income households, has meant the least privileged have paid the highest burden. For example, the consumer price index specifically for food is up 19% since January 2021, and electricity prices are up 23%. In the last month alone, food and electricity prices increased by 0.2%. Shelter prices, which increased by 0.3% last month and more than 7% over the past year, have also been a major driver of inflation’s resurgence.”
Supermarket News notes “that The average family in June spent about $973 at the supermarket, up 3.5% from last year. Use of apps that allow shoppers to finance payments surged 40% in the first two months of 2023.” When families must finance the basics of daily life, particularly when there is no relief in sight, that is a recipe for disaster. Loans must eventually be paid. There is no indication that conditions are moving to a point were payment will be feasible. This not the same as a house or car that can be repossessed. People will always have to eat.
The House Budget Committee reports that real median household income declined last year, falling from $76,330 to $74,580 in 2022-dollar terms. To put this in perspective, we haven’t seen this level of decline since the Great Recession of 2008.
Specifically, the report finds: Real median earnings declined by 2.2 percent over the same period. Real median post-tax income was down 8.8 percent relative to 2021. The reason for this decline in real income was the result of 40-year high inflation. In other words, the cost of good and services, also known as the Consumer Price Index (CPI) rose 7.8 percent between 2021 and 2022, while income growth could not keep up. In short, Americans have seen a decline in real median income both of Biden’s first two years in office.
Frank Vernuccio serves as editor-in-chief of the New York Analysis of Policy and Government.