Bacon's Rebellion

Democracy Thrives in Sunlight

Are Virginians Putting the State’s Economy on Their Credit Cards?

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by

sherlockj
in ,

by James C. Sherlock

Royalty-free stock photo Courtesy Dreamstime.com

I wrote the other day about efforts to increase housing in Virginia. That story is very complicated at the levels of the federal, state and local governments.

But at the end of that pipeline is the economy.

We have read in many places that consumers are spending the savings they built up during COVID, keeping the economy out of recession.

Perhaps.

But it turns out that consumers have been putting the economy on their credit cards as well.

U.S. consumer credit card debt was nearly a trillion dollars in the third quarter of this year. That is a 15% increase, the biggest year-over-year jump in more than 20 years. And that was just before the holiday shopping season.

Annualized GDP last quarter was $23 trillion. Consumer spending was $14 trillion on an annual basis, a 3% increase. So, credit card debt increasing at 15% is holding up consumer spending that is only up 3%.

Herb Stein wrote in the Wall Street Journal in 1985:

What economists know seems to consist entirely of a list of things that cannot go on forever, and this may be one of them. But if it can’t go on forever it will stop.

The only times since 1999 that consumer debt has decreased were during the great recession and the heights of COVID.

Taking a home equity loan to pay down credit card debt has often proven a way out in the past. But home equity loan rates have risen. A lot. To about 7% depending on the type and location of the home, equity in the home, and the credit score of the borrower.

We’ll see how the current levels of credit card debt work out this time.

But an increase in Virginia housing may have to wait until credit card balances, mortgage rates, housing prices, and the costs of land decrease, unemployment is higher and job creation is a priority.

Like in a recession.

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Comments

81 responses to “Are Virginians Putting the State’s Economy on Their Credit Cards?”

  1. vicnicholls Avatar
    vicnicholls

    Yes.

    1. how_it_works Avatar
      how_it_works

      I have zero debt aside from my mortgage, and I could quit my job and live off my savings for at least several years.

      I must have inherited my dad’s frugality.

  2. Nancy Naive Avatar
    Nancy Naive

    “U.S. consumer critical card debt was nearly a trillion dollars in the third quarter of this year.”

    Definitely critical card… damned autocorrect.

    1. James McCarthy Avatar
      James McCarthy

      Follow Shakespeare: Let’s kill all the critical and credit card holders.

  3. Nancy Naive Avatar
    Nancy Naive

    The federal student loan portfolio currently totals more than $1.6 trillion, owed by about 43 million borrowers.

  4. James A. Bacon Avatar
    James A. Bacon

    There are three broad categories of debt: consumer debt (of which credit card debt is one component), business debt, and government debt.

    Government debt is the least worrisome in the short run because the U.S. Treasury has limitless borrowing capacity. But it is the most worrisome in the long run, for if investors lose confidence in the government’s ability to repay, the whole country is sunk.

    Speaking over a long-term perspective, U.S. businesses have loaded up on debt because the Fed made money so cheap. Indeed, any company that did not leverage up its balance sheet — reducing equity and adding more debt — was derelict in its duty. Greater leverage gooses profitability… as long as interest rates stay low. But if interest rates climb, business debt could become a big economic problem.

    Consumers account for about two-thirds of economic activity, so consumer over-indebtedness is a short-term concern. Too much debt will translate into less consumer spending.

    If all three sectors are over-leveraged, then we could be in big trouble.

    As I’ve always said, Virginia needs to bullet-proof its balance sheet, keeping debt manageable, building up cash reserves, and not running hidden deficits by short-changing infrastructure maintenance or falling behind in pension contributions. Virginia also needs to heed the fiscal health of local governments and the host of independent quasi-governmental authorities. I love tax cuts as much as the next guy — certainly more than spending increases — but not at the expensive of maintaining an A++ credit rating.

    1. LarrytheG Avatar
      LarrytheG

      re: ” if investors lose confidence in the government’s ability to repay, the whole country is sunk.”

      you talking about the US govt as opposed to any/all countries debt?

      Like the guy running from the bear, he doesn’t have to be faster than the bear just the guy next to him.

      So if US Treasuries continue to be preferred over any/all other countries debt – what would change investors view of US Treasuries ?

      I’m not advocating for US Debt , just pointing out that even the GOP and Conservatives these days is discounting the harm of it.

      https://uploads.disquscdn.com/images/b8eb7b14389650a5459ca3efe6cf7307a19299081f68f8cf455b4428a505121a.jpg

    2. James McCarthy Avatar
      James McCarthy

      VA has no control over consumer spending. There’s no indication or data suggesting consumer debt is over leveraged. Consumer bankruptcies might indicate over extended. Given that inflation rose, the per cent of increased consumer debt was likewise prompted by inflation.

      1. Nancy Naive Avatar
        Nancy Naive

        Psst. Don’t forget that credit cards are replacing cash. When was the last time you actually saw money change hands at a cashier?

        1. James McCarthy Avatar
          James McCarthy

          Probably five years before this article told me about the credit crisis.

      2. DJRippert Avatar
        DJRippert

        “There’s no indication or data suggesting consumer debt is over leveraged.”

        Of course there is. Look at the forward looking predictions made during quarterly earnings calls from the companies that provide the consumer debt. Take CapitalOne, the ninth largest bank in America and based in Virginia. Its third quarter earnings call included (as most do) forward predictions. Their forward prediction of bad debt losses was significantly increased as announced on that third quarter earnings call.

        Here’s one article on the matter (although reading the entire third quarter earnings call transcript is more interesting, in my opinion):

        https://seekingalpha.com/news/3896877-capital-one-q3-earnings-fall-short-of-consensus-as-provision-for-credit-losses-jumps

        1. James McCarthy Avatar
          James McCarthy

          “Over leveraged” is being oversold. Soe significant portion of bad debt is related to identity theft not necessarily consumer behavior.

          https://www.wsj.com/articles/credit-score-washing-identity-theft-11669848797?mod=hp_lead_pos5

          1. Lefty665 Avatar
            Lefty665

            Oh Goody, it’s another Jim McCarthy silly walk. Bad debt is identity theft, not consumer spending. Hope the weather is nice on the planet you live on.

          2. DJRippert Avatar
            DJRippert

            No kidding. And the reason card issuing baks are predicting higher levels of bad debt is because they are predicting higher levels of identity theft.

          3. Lefty665 Avatar
            Lefty665

            Right, it has nothing to do with consumers spending more than they are making by using credit cards and decreasing their savings to get by month to month while inflation decreases their real earnings despite wage increases.

          4. Matt Adams Avatar
            Matt Adams

            You expected someone who clearly hasn’t passed a history class to understand even the most basic economics?

          5. Lefty665 Avatar
            Lefty665

            Not really, but why single out history failures?

          6. Matt Adams Avatar
            Matt Adams

            True enough, spread the wealth. It’s obvious he’s a jack of none, master of none type of individual.

    3. Nancy Naive Avatar
      Nancy Naive

      Except for the Republicans, I’ve never worried about the full faith and credit clause.

  5. LarrytheG Avatar
    LarrytheG

    Gasoline prices are dropped and some predict will drop below $3. The economy is still adding jobs and the unemployment remains low and the job market tight.

    The stock market shot up 700 points on news that the Fed signals smaller rate hikes.

    I’m not sure I’m be doing chicken little too much for Virginia at this point.

    It could still go to hell in a handbasket but if it doesn’t some appear to be ready to be disappointed!

    1. James McCarthy Avatar
      James McCarthy

      There will be no Nobel in Economics for the article. Beer talk economics is simply that: beer talk.

      1. DJRippert Avatar
        DJRippert

        What a crazy statement. Increasing credit card debt coupled with increasing interest rates on that debt clearly raises a red flag economically speaking.

        That’s not beer talk economics, it’s 10th grade economics.

        Look at the forward looking statements made by any and every bank that issues credit cards for Q3/2022. They all are expecting higher rates of default.

  6. Bubba1855 Avatar
    Bubba1855

    All of your comments have merit. I prefer to be prepared for some level of recession that is coming. How bad will it be? I have no idea. There is a lot of pent up purchasing power waiting to spend as evidenced by the prices of cars, both new and used. However, I offer a small anecdote. During the past 2 years whenever a house in my neighborhood went up for sale they were sold in a day or two above the asking price. Last week, 2 houses priced appropriately went up for sale. Medium interest the first day but no offers.
    Since then no offers. My take is that 6%+ mortgage rates will kill the housing market…which will trickle down. More small businesses in my area are taking down their ‘Hiring Now’ signs. I’m retired, I’ve been thru the ’73 oil crisis, Jimmy Carter’s 16% mortgage rates (I had a home at 6% which was ‘normal’ at the time), Reagan’s ’82 recession (which hurt me, but I survived) 9/11, 2008-9 recession and now this. Being an Ivy League MBA I am aware of all of the macro/micro economic numbers. Another small anecdote. In my city of 60,000 on our main drag there must be a dozen fast food businesses…and one Chick-f-lay. Yes, the ‘Chick’ has traffic backed up on the main drag while the others have no more than 3 or 4 cars in line. What does this tell us? Americans have too much money to spend or at least they think they have enough. At some point the shit will hit the fan. I hope not, but I’m going to be prepared. Yellen is correct, even though I hate to admit it. Americans are spending too much money on crap they don’t need. Sadly,
    the upper middle class in NVA will not be effected, however, real working people in VA are going to have hard time. The divide between the ‘haves’ and the ‘have nots’ will get greater.

    Just my rambling/ranting thoughts.
    God Bless and have a good day,
    Bubba

    1. LarrytheG Avatar
      LarrytheG

      Thanks! Yes, it’s a shock for anyone who has not bought fast food in a while that swings by to get some. Lord. Lord, seems like it has doubled/tripled in price in the last year or two and it’s not coming down and yes, no shortage of customers….

      1. DJRippert Avatar
        DJRippert

        Fast food is historically a good harbor in a bad economy. During recessions, sit down dining tends to fall while fast food tends to rise. Go to your local Morten’s and tell me how crowded it is.

  7. how_it_works Avatar
    how_it_works

    There was some news article a couple years ago about how so many people in Northern Virginia with 6-figure salaries are living paycheck to paycheck.

    I hope such people aren’t managing budgets for three-letter agencies.

    1. Eric the half a troll Avatar
      Eric the half a troll

      Given the current bout of Conservative threats about not funding the government, living paycheck to paycheck may be the exact skill set needed to manage today’s three-letter agencies… alas…

    2. LarrytheG Avatar
      LarrytheG

      umm.. I get your point maybe… but if the idea is that we have folks with 6 figure salaries who can’t manage their own finances in charge of these agency budgets…. there is a big difference. Individual agencies cannot borrow money, only the Fed can and the agencies only get what Congress allots them.

      Now, in terms of Congress wasting money based on what some Agency says they “need” – well that’s a horse of another color!

  8. Nancy Naive Avatar
    Nancy Naive

    So Captain, for what do you use your credit card?

    I have a friend, retired Colonel, who has all of his utilities and recurring bills paid by his USAA rewards card. Everything that he can. Pays it off monthly and collects that 2% kickback.

    Don’t you?

  9. Nancy Naive Avatar
    Nancy Naive

    So Captain, for what do you use your credit card?

    I have a friend, retired Colonel, who has all of his utilities and recurring bills paid by his USAA rewards card. Everything that he can. Pays it off monthly and collects that 2% kickback.

    Don’t you?

  10. Nancy Naive Avatar
    Nancy Naive

    Before I freaked out over credit card debt, I’d be only concerned on such debt carried over 3 months or longer. Cards are replacing cash, so of course the one month float is going to increase. When was the last time you actually saw someone handling money at a checkout? Aside from me, for me, it’s almost never. And THANK GOD. It’s been years since I was stuck behind some woman fishing through a suitcase sized purse looking for $.37 in change to avoid getting $.63 back from another dollar.

    People slap a card, and go. I’m a dying breed — the guy who parks at the pump, walks into the store, hands the clerk a $20, and leaves with 7/8 of a tank because to fill up would require better guessing or a second trip to retrieve the change from a $40 deposit.

    So you need to also know if there’s a fall in cash usage over time to compare to the increase in credit card debt.

    1. how_it_works Avatar
      how_it_works

      “I’m a dying breed — the guy who parks at the pump, walks into the store, hands the clerk a $20, and leaves with 7/8 of a tank because to fill up would require better guessing or a second trip to retrieve the change from a $40 deposit.”

      There’s a certain gas station in a bad area of Manassas where all the pumps always have cars parked in front of them because the clientele probably can’t get a bank account and has to pay cash for everything.

      1. Nancy Naive Avatar
        Nancy Naive

        I thought that was true of every station in NOVA. I can still remember the FIRST time I had to pay before pumping. It was at an station in Oxen Hill. The clerk was sitting in a booth behind bulletproof glass with a pushme-pullyou drawer. It was 11AM on a weekday. I thought to myself, “whoa, wrong exit.” A coworker later told me, “Nah, that’s the way it is up here.”

        1. how_it_works Avatar
          how_it_works

          No station clerks behind bulletproof glass in Prince William County that I’ve seen, but if the daily police blotter is any indication, it’s probably coming…

  11. Nancy Naive Avatar
    Nancy Naive

    More anecdotal stuff. I’m sure there’s a tax lawyer out there who would freak at this but…

    When my daughter was a HS sophomore, she got her first paying gig. As kids are wont to do, she waited until the last possible minute before saying her employer wanted an account for direct deposit. I quickly set up a savings account for her online at my bank, funded it with $100, and made it joint with me as secondary. Over the next month, we opened her a checking account, a Roth IRA, and a prepaid debit card so she wouldn’t have to carry cash. In college, she opened a credit card account.

    But she always maintained the joint savings, and until taking her last job 4 years ago, used it for all direct deposits, tax refunds, etc. As a result, I had a keyhole view into her cash flow for 16 years. It’s amusing. Got to watch her pay off her CC, move money to checking, invest, etc.

    Spouse has accused me of virtually reading her diary, and I probably should have her close it, but I tell myself, if she ever needs money, I can dump $100K in that account in seconds without initiating a SAR.

    1. how_it_works Avatar
      how_it_works

      I had a joint checking account with my mom from back when I was in HS.

      I stopped using that joint checking account and created my own about 25 years later when she bounced a check and the bank took the money out of that joint account.

      My mom is basically a financial disaster. She combines her ignorance about financial matters with a certain stubbornness and a tendency to blame others when things go wrong.

      Before he passed away, my dad told me that when they first got married he had to explain to her that just because she had checks left, doesn’t mean that she can keep writing them!

      She also got half of my dad’s 401k in the divorce (and she wisely (sarcasm) waited until AFTER we moved to Virginia to initiate that divorce–$600 a month in child support would have gone a hell of a lot further where we lived before!) and somehow ended up with nothing. (Had she just left it alone, it would have been worth about 900K now, and paying probably $40k a year in dividends).

      EDIT: Thankfully, the assets in my dad’s ESPP somehow survived the divorce. I don’t know if she or her attorney (she had like 5 different attorneys through the divorce proceedings..) never knew they existed or what. It’s a small miracle.

      She did get his SS when he passed away, and she complains that she can’t live on $3k a month of tax-free income despite having no expenses other than utilities and food (edit: and whatever garbage she buys from the home shopping network) (her house is paid for, not due to any superb financial planning on her part, she just bought a house with the half that she got from my dad and then sold it later and moved to a cheaper house and paid cash for it).

      Honestly, if she hadn’t married my dad, she’d probably be in a homeless shelter somewhere.

      1. Nancy Naive Avatar
        Nancy Naive

        The “fear” I have about joint accounts is it demonstrates a willful intent to co-mingle assets. If the two parties aren’t normally expected to share assets, does this open party A to action by creditors of party B beyond the shared assets?

        The example that comes to mind is a successful restaurant in Hampton. The owner decided to open a second restaurant and lined up investors. Some claim it was his intention to fail, i.e., ripoff his investors. When the restaurant tanked, the investors went for their money. The lawyer scoured the restaurant’s books and found an entry where the second restaurant manager “borrowed” a keg of beer from the successful restaurant. They argued that the borrowed keg showed a willingness to co-mingle assets. The bankruptcy court agreed. The creditors were make whole by the liquidation of both restaurants.

        1. how_it_works Avatar
          how_it_works

          So one should NOT have a joint account with their flaky girlfriend for that reason…

          1. Nancy Naive Avatar
            Nancy Naive

            Well, that and it makes it more likely the wife will find out.

  12. James McCarthy Avatar
    James McCarthy

    Reports of the threat of consumer debt may be greatly exaggerated. A WSJ article notes that fraud, particularly identity theft, cost lenders between $200-400 million last year. The FTC reported 588,000 cases last year an increase from 155,000 five years earlier. The $200-400 million accounts for some portion of the scary 15% reported here.
    https://www.wsj.com/articles/credit-score-washing-identity-theft-11669848797?mod=hp_lead_pos5

    1. Lefty665 Avatar
      Lefty665

      With close to $1T in credit card debt identity theft is a small part of it.

      Of more importance is that card holders are not liable for fraudulent charges so they are not part of the outstanding balances. They are expenses for the card companies P&Ls when realized, and liabilities on their balance sheets before that. They are paid for out of interest on outstanding credit card balances which increases the burden on consumers.

    2. Lefty665 Avatar
      Lefty665

      With close to $1T in credit card debt identity theft is a small part of it.

      Of more importance is that card holders are not liable for fraudulent charges so they are not part of the outstanding balances. They are expenses for the card companies P&Ls when realized, and liabilities on their balance sheets before that. They are paid for out of interest on outstanding credit card balances which increases the burden on consumers.

    3. DJRippert Avatar
      DJRippert

      In the third quarter, CapitalOne alone increased their allowance for bad debt by more than $600M. Kind of makes the $200-$400M for the entire economy look small.

      1. Lefty665 Avatar
        Lefty665

        That’s risk of default, not identity theft. It is their estimate of how close the edge consumers are living and the probability that increasing numbers will go over the edge.

    4. Lefty665 Avatar
      Lefty665

      With close to $1T in credit card debt identity theft is a small part of it.

      Of more importance is that card holders are not liable for fraudulent charges so they are not part of the outstanding balances. They are expenses for the card companies P&Ls when realized, and liabilities on their balance sheets before that. They are paid for out of interest on outstanding credit card balances which increases the burden on consumers.

  13. Eric the half a troll Avatar
    Eric the half a troll

    “Consumer spending was $14 trillion on an annual basis, a 3% increase. So, credit card debt increasing at 15% is holding up consumer spending that is only up 3%.”

    Math is a funny thing… 3% of $14 trillion is $420 billion. Your increase of 15% in credit card debt only amounts to $38 billion (according to your article). So less than 10% of the increase in consumer spending is credit card based. I suspect that is normal in a healthy growing economy.

    Edit: Your article says debt is up $121 billion year over year (the $38 billion was just the Q3 figure). Therefore the percentage of the past year’s consumer spending increase that is credit card based is actually 29%. Still not jaw-dropping by any means. Again increases in credit card debt are exactly what one would expect with increases in consumer confidence (a sign of a healthy economy).

    Note that none of this data is provided on a per capita basis which means it is essentially meaningless.

  14. Eric the half a troll Avatar
    Eric the half a troll

    From the same report. Credit card delinquency is down (as it is for most all other credit sources). Not a sign that consumers are over leveraged, I would say…
    https://uploads.disquscdn.com/images/41bc545ad2f31770801de15e03b1f7b65c6a39f19b516c7374c6b4055012cc54.jpg

    1. Nancy Naive Avatar
      Nancy Naive

      Venmo

    2. DJRippert Avatar
      DJRippert

      Q1 data? We’re almost done with Q4. Talk about driving by looking in the rear view mirror!

      Read the Q3 earnings call transcripts for banks that issue credit cards. Understand their forward guidance. They are all predicting higher bad debt losses. They don’t make those predictions eagerly since bad debt losses reduce EPS and lower the stock price of the companies.

      I will bet you that credit card delinquencies increase in 2023. A beer? A dinner?

      1. Nancy Naive Avatar
        Nancy Naive

        Maybe you can provide forward-looking delinquency? OTH, that chart is Q1 yoy, so it’s apples to apples, AND includes Xmas.

        1. DJRippert Avatar
          DJRippert

          The chart has 2022/Q1 as its last data point and defines “delinquency” as accounts being at least 90 days past due. So, the borrowing that caused the delinquency was, at the latest, incurred in 2021/Q3.

          Per the CapitalOne earnings statement, “Q3 credit loss provision stood at $1.67B, up from $1.09B in Q2”

          Now, I know the lefties on this board all fancy themselves as economic geniuses but I’ll take my bet based on the real economists employed by companies like CapitalOne.

          1. LarrytheG Avatar
            LarrytheG

            No economic genius here but Conservatives these days – you know the ones that did the Trump tax cuts and put it on the credit card , and advocate supply side and trickle-down, I’d not believe their ruminations for nothing in this world.

            They USED TO BE – real fiscal conservatives, no more.

        2. Lefty665 Avatar
          Lefty665

          Increases in allowances for bad debt are forward looking. Check those balance sheet liability accounts for corporate forward looking estimates.

      2. Eric the half a troll Avatar
        Eric the half a troll

        I should clarify. That was just one quesrter of increase but it was Q3. I have corrected my post to reflect this

        But of course if credit card debt is increased delinquencies will increase just like when debt was slashed during the Trump pandemic recession, the banks were seeing a (benefit) for credit losses.

    3. LarrytheG Avatar
      LarrytheG

      Why am I not shocked? It seems that Sherlock and JAB can’t resist the urge to present one-sided views… which they consider the same as promoting their “conservative” views.

      I give Dick and Matt Hurtt credit for trying to present fairly objective viewpoints even as they also provide their own views. It looks like Sherlock and JAB just can’t help themselves sometimes and the “comments” section is the way that some “balance” is brought to bear.

      But of course, it’s the comments that Sherlock wants to “limit”… hmmmm

      1. Eric the half a troll Avatar
        Eric the half a troll

        They often play funny with the math as well to promote their viewpoints – see my previous post. (Btw, I am up to 3 posts on this topic … Sherlock would now cut me off no matter where the discussion goes… alas…)

        1. LarrytheG Avatar
          LarrytheG

          oh yes… I’m quite sure he has a spreadsheet of “commenters” per blog post and keeps it updated….

          1. Nancy Naive Avatar
            Nancy Naive

            I believe he’s said as much.

        2. Nancy Naive Avatar
          Nancy Naive

          Don’t worry. Comments bring people to the site. Why would JAB want to limit advertising?

      2. DJRippert Avatar
        DJRippert

        I will offer you the same bet I offered Eric … will credit card delinquency rates go up or down in 2023. I’ll take the side that every credit card issuing bank is taking – they will go up. You take the “stay level” or “go down” side of the bet.

        Now, how much to bet? A beer, dinner, $100, $1,000?

        The good news for you is that if you bet cash it will be worth a lot less by January 2024 (when the results are in) than it is now … thanks to the clown in the Oval Office.

        1. LarrytheG Avatar
          LarrytheG

          Not a betting man for the most part, won’t say never but you’re looking at one thing and making bets on one thing and the issue is the bigger economy.

          Which continues to add jobs…continues to have a tight labor market and low unemployment..

          and the pandemic totally changed the way that people do purchasing… even at fast food places…

          so the use has gone up a lot, and the question is – has the debt gone up proportionately or higher than proportionality?

          I make it a practice to take with a grain of salt anything that Conservatives say about the economy when they’re not the POTUS.

          Pretty predictable.

          and then we have the chicken little conservatives :

          https://uploads.disquscdn.com/images/bef2d17f27f0d8716b3cc136a0811debf800585629cbaadf0b9bdda1e7f129bf.jpg

          1. DJRippert Avatar
            DJRippert

            ” … and the issue is the bigger economy.”

            No. The issue at hand in this article is about credit card debt.

          2. LarrytheG Avatar
            LarrytheG

            Not really. That’s a narrow isolated perspective that if you look at that alone won’t give you a good perspective.

            cherry-picking IOW…

          3. DJRippert Avatar
            DJRippert

            A discussion of the total economy would require a book, not a blog post.

            Try to stick to the topic at hand. At least occasioally.

          4. LarrytheG Avatar
            LarrytheG

            Don’t need the book, just some basic honesty and objectiveness when discussing various parts of it.

            It’s sorta like claiming Social Security is “broke” and other chicken little nonsense.

  15. Tom B Avatar
    Tom B

    Rounding numbers:
    CC debt (CC)= $1T
    Fed tax returns filed (TR)= 200M
    CC / TR = $5,000/return
    US gov’t debt – fed (US) = $30T
    US / TR = $150,000/return
    Adjusted per Nancy’s request to include individual, estate, trust and business returns.
    Note that the debt figures for gov’t do not include unfunded liabilities, or state and local borrowing.
    Since the CC figure is consumer debt, Nancy will have to supply the figure for business, etc. CC debt to make these figures accurate.

    Original:
    CC debt (CC)= $1T
    Fed tax returns filed (TR)= 150M
    CC / TR = $6,666/return
    US gov’t debt – fed (US) = $30T
    US / TR = $200,000/return

    1. LarrytheG Avatar
      LarrytheG

      https://uploads.disquscdn.com/images/147cdebb66cf97cc5b993589e3c0f196d195c5d905994bfe182c439e21056d4b.jpg

    2. Nancy Naive Avatar
      Nancy Naive

      Personal debt, yes. $6K per household.

      To use your last, US/TR you should include all financial entities, e.g., trusts, estates, businesses, etc.

      Ref: erratum– very good. Still of no value though.

  16. Nancy Naive Avatar
    Nancy Naive

    I believe it was Ben Franklin who once said, “Show me a man who earns two pennies, saves one and spends the other, and I’ll show you a man who is happy.”

    Later W.C. Fields quipped, “Show me a man who earns a penny, spends two, and I’ll show you a man who is ecstatic.”

    We are the beneficiaries of debt, not slaves to it.

    1. DJRippert Avatar
      DJRippert

      Managed debt during predictable times, yes. I have always questioned the intelligence of Harry Byrd’s “pay go” system. Richmonders tend to hail it as genius. I think it was stupid. Over-borrowing to build roads in other states was a problem. Under-borrowing in Virginia was a problem too.

      The question isn’t whether debt is good or bad. The question is how much debt is good or bad.

      1. Nancy Naive Avatar
        Nancy Naive

        When I was in K12, Va History cited “pay as you go” as the major contributor to Va’s soft landing in the Great Depression relative to the country in general.

        That’s because you couldn’t tell the difference between Va before the depression and during it. Va was (is?) constantly depressing.

        1. LarrytheG Avatar
          LarrytheG

          “pay as you go” is also the way Social Security is funded…right?

          1. DJRippert Avatar
            DJRippert

            Yep. Hence the demographic cliff that we’re facing.

            In some sick and sad ways, COVID helped Social Security by differentially killing off people who were, or were soon to, receive the benefits.

          2. LarrytheG Avatar
            LarrytheG

            all annuities work that way right?

            So all those retired school teachers and deputies and others with employer retirement…..

            big savings for Medicare too!

        2. how_it_works Avatar
          how_it_works

          Well, to be fair, Virginia had invested in a lot of infrastructure prior to the “War of Northern Aggression” that got blown up in said war, didn’t they?

          Probably didn’t want a repeat of that so they decided to invest in nothing.

          Because that war was all about the North exploiting the economic resources of the South. Or something like that.

          1. Nancy Naive Avatar
            Nancy Naive

            Yeah, but at really low wage costs. One might even say, “slave wages”.

          2. how_it_works Avatar
            how_it_works

            Same reason that Virginia has largely preferred to make the feds pay for infrastructure rather than paying for it themselves.

      2. how_it_works Avatar
        how_it_works

        I wonder if these Richmonders who hailed it as genius waited until they had enough money to pay cash for a house, or if they got a mortgage?

      3. LarrytheG Avatar
        LarrytheG

        Was not Byrd’s “pay go” essentially to institute a gas tax to pay for roads?

        We continue that approach, don’t we?

        Conservatives bitch about the gas tax and tolls AND not enough road building. Blood from stone?

        If you want MORE roads, they’re gonna cost you, no?

  17. Lefty665 Avatar
    Lefty665

    But wait, there’s more… In addition to increased credit card balances, savings have plummeted. Consumers are unquestionably spending more than they are making, and it is going for inflation spiked living expenses, not taj mahals. Plus, while wages are up more than 5% inflation is significantly above that.

    How much more is hard to tell. The 7-8% numbers we’re getting from the Feds are sketchy. If we calculated inflation as we did the last time it was high (40+ years ago) the rate would be about twice what we call it today. A 15% inflation rate is more consistent with the increase in credit card debt, reduced savings and eroded real wages that are currently reported.

    We are the walking dead whistling past the graveyard. The question is only when we hit the wall and collapse (I’m putting my money in mixed metaphors and trying to increase the supply). My guess is late winter, like January-March with savings depleted, cards maxing out, food, heating and fuel even more expensive, the collapse of the housing and construction markets rippling through the economy, Fed interest rates increasing credit interest rates, slowing employment, bleed over from Europe’s disaster, and whatever random bad events pop up.

    Many of the commentators are young enough they haven’t seen anything like this before, and even many of the politicians who have are in denial. There’s a lot of obliviousness and fixation on the few positive numbers that are still showing up.

    Yo ho ho, and season’s greetings.

    1. Matt Adams Avatar
      Matt Adams

      I remember getting upset when my wife would have a $200 + grocery bill around Christmas each year. Now, that is a weekly bill.

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