The US economy is still holding up, but the question is how long it can hold out. Yesterday the US employment data for the month of September was released: 263,000 new non-agricultural payrolls were created and unemployment fell to 3.5%.
A good fact that contrasts with the figures for public debt in circulation in the country – it has exceeded 31 billion dollars for the first time in its history -, that of consumers – it is currently at 4.7 billion dollars , a figure never seen before – and that of his personal savings – at 652,800 million dollars -.
Instead of ending with the end of the pandemic, US borrowing has continued to rise. Between January and August of this year, the public debt in circulation in the country has increased by 1 trillion dollars, which brings it dangerously close to the debt ceiling of 31.4 trillion dollars imposed by the US Congress until 2023. , there are no signs that the situation is going to change, but rather the opposite due to the rise in interest rates.
As the Committee for a Responsible Fiscal Budget (CRFB) warns, this scenario could cause greater inflationary pressure and this, in turn, would take the national debt to a new record in 2030 and triple federal interest payments during the next decade.. In the event that the Fed decides to undertake more hikes than expected or faster, that scenario would become a reality much sooner.
On the other hand, the increase in the cost of loans has not been able to curb consumer indebtedness. In July, consumer credit rose to 6%. A month later, that figure reached 8.3% , according to the US central bank report. As for the non-revolving -composed of personal loans, for studies and the purchase of vehicles-, it stood at 5.1% , while the renewable -which includes credit cards, financing lines with mortgage guarantee, and loans personal and small businesses – exceeded 18% .
Although the personal savings of Americans increased slightly in August, just two months earlier they had reached 555.7 billion dollars – the lowest level since the low recorded in 2009 – and a far cry from 6.42 trillion dollars in April 2020 , according to data from the US Department of Commerce’s Bureau of Economic Analysis collected by Quartz .
Given that the Fed has no intention of keeping interest rates below 4% and that it also fails to achieve its goal of bringing inflation down to 2%, the combination of the above factors will leave US households in a difficult situation. both complicated if the recession is stronger than expected. In that case, Americans could find themselves without the cash needed to get through it and the Biden Administration would be forced to inject a new round of stimulus. This, in turn, would further increase the country’s public debt .