The US economy has set an all-time high record in personal finance destruction, according to a shocking data trend that shows a significant increase in the country's debt and consumption problem.
Credit card debt is a problem that Americans have been warned against for years. Although they were making headway before the pandemic, the crisis that ensued exposed the fragility of the country's savings rate. Before the pandemic, the US had never hit $900 billion in credit card debt. But during the pandemic, as the government stimulus checks were rolled out, credit card debt dropped to $750 billion. Companies were getting stimulus from the government, and individuals were getting stimulus checks, which they used to pay off debts. This positive trend, however, didn't last long.
The US's savings rate, which is between 7-8%, spiked way up during the pandemic, thanks to the government stimulus checks. People were locked down in their houses and had nothing to do, so they saved money. However, the savings rate did start to come down when people were getting used to all the money coming in. But here's the real kicker: the credit card debt is ballooning to $939 billion, and the savings rate has dropped to 3.4%, the lowest it's ever been.
The power of compounding interest has always been a popular topic among investors. However, it works both ways: if it's working for you, it can make you money, but if it's working against you, it can destroy you. Unfortunately, the compounding interest is working against those who have fallen into credit card debt, which is now at an all-time high. With the average APR for a credit card standing at over 20%, credit card debt is a no-go. This is a lesson that many Americans have yet to learn.
In conclusion, the US has set an all-time high record in personal finance destruction. While some people are paying off their debts, others are accumulating more debts, which is not a sustainable way to live. People need to learn to manage their finances better, and the government needs to do more to help the country's economy. It's time for America to address its debt and consumption problem before it's too late.
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