“Kudlow” panelists Art Laffer and Steve Moore react to voters abandoning “Bidenomics” ahead of the 2024 presidential election.
While the White House was giving a lecture. economic strengthAmericans are drowning in credit card debt, which reached a record $1.13 trillion by the end of last year.
Of course, Americans are unhappy with the economy. We have to pay for necessities on credit cards that are charged $240 billion in interest every year. How we got here is a lesson in failed government policy.
Excessive government spending over the past four years has created a veritable cost-of-living crisis, leaving families mired in debt. As governments spent, borrowed, and printed trillions of dollars, the value of the dollar decreased, causing inflation. All Americans’ paychecks and savings could lose value, leaving them with less to buy.
President Biden speaks about his “Bidenomics” economic plan in Milwaukee, Wisconsin on August 15, 2023. (Scott Olson/Getty Images/Getty Images)
From January 2021 to June 2022, real (inflation-adjusted) average weekly earnings fell by 5.1%. As of January 2024, three years after President Biden took office, real profits were still down 4.4%. The real value of a typical American family’s weekly wage decreased by $85 over that period, even though it increased by $270.
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With 60% of families living paycheck to paycheck, many have had to take second or even third jobs to make ends meet. While it increases salaries and monthly employment numbers look impressive, it is actually a sign of poverty, not wealth. Many families also fell into debt and relied on credit cards to pay for necessities like rent, groceries, and utilities.
This left nearly half of Americans unable to pay for their purchases at the end of the month, and credit card balances soared to a record $1.1 trillion. And it’s not just a temporary spike in borrowing due to Christmas shopping a few months ago. In fact, a quarter of cardholders still have debt from their 2022 holiday shopping.
Former CKE Restaurant CEO Andy Puzder explains the importance of addressing the impact of wages on U.S. debt and restaurant affordability.
becomes terrible. Many Americans accumulated debt on credit cards when interest rates were at or near his 0%. With the end of these introductory offers and the rapid rise in interest rates over the past few years, credit card financing costs have shattered all-time records.
The combination of record-high credit card balances and interest rates means Americans are now paying $240 billion a year in interest alone before paying off a penny of their outstanding balances. This will incur additional costs on top of the already stratospheric increase in their cost of living.
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Sadly, many families find themselves in a debt trap and cannot afford to pay for existing expenses, let alone additional financial costs. Not only do they have to pay today’s bills, but they have to take on more debt to pay the interest on yesterday’s loans. It’s a downward spiral that ends in disaster.
Ramsey Solutions personality Jade Warshaw talks about young people living with their parents, ‘buy now, pay later’ risk and how to best diversify your stock allocation.
Runaway government spending is delivering a one-two punch to household finances, as today’s interest rate hikes are a response to the highest inflation in 40 years. It causes inflation, which makes borrowing necessary and making that borrowing more expensive.
However, the damage caused by the government is not only external but also internal. The federal debt has jumped by about $6.5 trillion since January 2021, to an eye-watering $34.2 trillion. Interest on the debt currently costs taxpayers more than $1 trillion annually, or more than 40% of all personal income taxes.
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It’s not about fixing roads and bridges, funding schools, maintaining airports, or funding the military. It’s just paying off a debt.
Johnny Roger’s owner Barrett Dabbs details how his Concord, North Carolina, barbecue and burger joint, Varney & Co., is being hurt by inflation.
Last year, I predicted that interest rates would consume a record proportion of the economy by 2025, and the nonpartisan Congressional Budget Office just agreed with this prediction. Politicians are racking up so much debt on the nation’s credit cards that interest will soon become the federal government’s biggest expense.
But politicians can rely on the Federal Reserve to generate more money. American families don’t have that luxury. Instead, money creation causes further inflation, and families find themselves back on the hamster wheel, working hard but falling further behind.
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That’s the key to understanding why Americans do what they do. view the economy very unfavorably In a public opinion poll. Over the past three years, we have regressed financially, even though our salaries have increased.
This situation will continue if Washington maintains its profligate behavior. Every time the federal budget increases, household budgets decrease.
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