Though our economy is doing well generally speaking like a C+ grade in school the general public is taking on too much debt because of inflation

This is the ugliest part of the economic indicators right now.

Begin partial quote from:

What's really happening in America's economy

 

The ugly

The biggest flashing red light in the economy right now is the level of debt people are racking up.

One reason consumer spending has held up so well in the face of higher-than-desirable inflation combined with the highest interest rates in over two decades is that consumers aren’t necessarily spending within their means.

The savings many accumulated during the pandemic have all but evaporated, leading to a lot more credit card purchases that aren’t being paid back on time.

That, combined with the gradually cooling labor market — which is reducing workers’ leverage — is causing some households to accumulate more debt and fall into serious delinquency, meaning 90+ days late on a payment.

Recent New York Fed data showed the percentage of credit card balances in serious delinquency climbed to its highest level since 2012.

“The rising levels of consumer debt and delinquency rates, if continued, are not just individual problems; they could have macroeconomic effects requiring attention from economic policymakers,” Sung Won Sohn, a Loyola Marymount University economics and finance professor and chief economist of SS Economics, wrote in a recent note. “As more income is directed toward debt repayment, consumers have less disposable income for other purchases.”

The rising delinquencies will likely force banks and other lenders to lend less money to borrowers deemed riskier or cause lenders to charge even higher interest rates, he said. Ultimately, these combined effects “can contribute to a broader economic slowdown — or even a recession.”