Where Do We Invest When Debt Is Soaring?
Alex Moschina|February 10, 2024
Let’s see here…
Consumer debt is still soaring.
In August – the last time I touched on the topic – I noted that Americans were sitting on just over a trillion dollars’ worth of credit card debt.
“Between April and June alone,” I wrote, “we added $45 billion to the pile.”
Now the latest figures are in…
And they aren’t pretty.
Despite the Fed raising interest rates to a whopping 5.5%, consumers have continued to rack up higher and higher levels of credit card debt.
And when we say “higher and higher,” we’re talking record-breaking levels of debt here.
As Fox Business reports:
In the three-month period from October to December, total credit card debt surged to $1.13 trillion, an increase of $50 billion, or 4.6% from the previous quarter, according to the report. It marks the highest level on record in Fed data dating back to 2003 and the ninth consecutive annual increase.
It’s a tad ironic, perhaps, that just one week ago we wrote that “debt actually matters.”
That may be true among the political class… at least during an election year. But among the folks you see at your local Target, it’s clearly a different story.
Bring the Pain
We can’t know exactly when consumer credit card debt will reach its apex. But with rates higher than they’ve been in more than two decades, the average American is going to start feeling the squeeze soon.
Not surprisingly, credit card delinquencies have already been ticking upward.
According to the latest quarterly report from the Federal Reserve Bank of New York, “Serious credit card delinquencies increased across all age groups, notably with younger borrowers surpassing pre-pandemic levels.”
As we’ve said again and again… trouble is brewing.
But it isn’t our job to wag a finger at the fast-growing consumer debt bubble.
Rather, it’s to reiterate a simple fact…
That there is always a way for investors to play the situation. Even one as dire as this.
As the economic pain sets in, consumers will no doubt be forced to reduce spending on luxurious experiences… and return to more cost-conscious options.
Fast food is a perfect example.
Folks on a budget can’t afford to patronize some swanky new steak house… but there’s always good ol’ McDonald’s.
That’s part of the reason why Shah dedicated this week’s edition of Buy This, Not That to three well-known restaurant brands. (His favorite of the bunch might surprise you.)
And keep scrolling for links to the rest of this week’s featured pieces.
Note: Our goal with this weekly mailing is to shine a light on any action you may have missed at Manward. We hope you find it useful. If you have a minute, let us know how we’re doing here.
Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.