According to an article appearing today on the website for the American Bankruptcy Institute, the American middle class is falling deeper into debt to maintain a middle-class lifestyle. The ABI article is based upon a Wall Street Journal analysis. According to the ABI and WSJ:
“Incomes have been largely stagnant for two decades, despite a recent uptick. Filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy. Consumer debt, not counting mortgages, has climbed to $4 trillion — higher than it has ever been even after adjusting for inflation. Mortgage debt slid after the financial crisis a decade ago but is rebounding. Student debt totaled about $1.5 trillion last year, exceeding all other forms of consumer debt except mortgages. Auto debt is up nearly 40 percent adjusting for inflation in the last decade to $1.3 trillion. And the average loan for new cars is up an inflation-adjusted 11 percent in a decade, to $32,187, according to an analysis of data from credit-reporting firm Experian. Unsecured personal loans are back in vogue, the result of competition between technology-savvy lenders and big banks for borrowers and loan volume. The debt surge is partly by design, a byproduct of low borrowing costs the Federal Reserve engineered after the financial crisis to get the economy moving. It has reshaped both borrowers and lenders. Consumers increasingly need it, companies increasingly can’t sell their goods without it, and the economy, which counts on consumer spending for more than two-thirds of GDP, would struggle without a plentiful supply of credit.”
Economists have noted that the level of income inequality between the top 1% and the rest of the country is approaching levels last seen in 1928, which, of course, was just before the tragic financial meltdown that pre-dated, or even caused, massive impacts in the U.S. and the rest of the world.
The obvious implication of this data is that another meltdown looms on the horizon. For further insight into this dynamic, FactorLaw recommends the this article published in Money Watch.
According to a May 30, 2018 article in Illinois Patch, Illinois is among the top 10 states where residents have the most credit card debt. That’s according to a report released Tuesday by New York Comptroller Thomas DiNapoli. According to the study, Illinois residents had racked up a whopping $32.2 billion in credit card debt by the end of 2017.
But that pales in comparison to California — the state where you’ll need to earn the most to be considered “rich” — where the total was $106.8 billion.
These were the top 10 states with the most credit card debt, according to DiNapoli:
California $106.8 billion
Texas $67.3 billion
Florida 59.2 billion
New York $58.1 billion
Pennsylvania $33.2 billion
Illinois $32.2 billion
New Jersey $29.6 billion
Ohio $26.7 billion
Virginia $26.5 billion
Georgia $26.3 billion
The report offered some sobering statistics about credit card balances nationwide, which declined between 2008 and 2013 but began climbing again in 2014, DiNapoli said.
In 2017, there were nearly 470 million credit card accounts with available balances totaling $3.5 trillion nationwide, with credit cards being the most common method for consumer borrowing, the report notes.