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Personal credit debt hits all time high … and is crushing folks back home   

Personal credit debt hits all time high … and is crushing folks back home   

Personal credit has hit an all-time high at just a smidgeon over $1 trillion.  That is a statistic that tells us a lot about the American economy today – and its future.

What this does tell us is that millions of Americans are in or will be entering the “credit trap.”  That occurs when the creditor is not able to sufficiently reduce the principal because of the amount of interest is all they can pay.  And that interest payment will never go down unless the creditor can make meaningful reductions in the principle.

(I know the problem because years ago, I got sucked into the “credit trap.”  It was horrifying to realize that I did not have sufficient income to knock down the credit card debt. It was all I could do to cover the interest.  It took me a couple of years to escape from the trap – and that meant cutting a lot of expenses and working extra hard to increase the income.  Today, I have fewer credit cards … I keep the credit limits very low … and I keep the monthly charges well below the credit limits.  Nothing is more liberating than pay-as-you-go.  But I digress.)

There is a second problem for folks in the “credit trap.”  Even though they cannot reduce the principal by very much in any given month, they still use the card – until the credit limit is reached.  And that puts another squeeze on the monthly budget.  That is about the time they default.

The $1 trillion personal credit partly explains why President Biden’s and the Democrat’s good news gospel about the economy is not winning over the public.  Put simply, Biden & Co. push a false theory about the economy.  The folks back home are living with reality.

Biden’s economic team talks proudly how the economy is roaring based on consumer spending.  Despite the increase in interest rates by the Federal Reserve, there has been little impact on consumer purchases.  The public is spending more than ever. 

But that may be changing. The credit card debt may finally be tamping down purchases.  Black Friday fell short of expectations, and retailers are predicting sluggish Christmas sales. 

Much of that spending is for the purchase of goods and services, but a good measure of the increase in spending is due to … inflation.  Inflation itself often increases spending as people over purchase today for what they believe will be more expensive tomorrow.

The problem is not how much the public is spending but how?  It is that $1 trillion dollars in credit purchases that has millions of Americans struggling – and driving millions more to the precipice of financial collapse.

Even “Morning Joe’s” Mika Brzezinski is conceding that the economic problem is not a messaging failure.  She rightfully pointed out that the 30-something Americans cannot afford homes.  They cannot pay their bills.  They are in dire straits.  She even said that Biden’s upbeat message is not going to work in the face of the grassroots realities.

While the White House economists advance a politically biased analysis of the economy – spinning isolated so-called good news where they can – but they are not addressing the real hardship at the grassroots.  The people are facing INCREASING COSTS at the checkout counter.  So, they are relying on the use of MORE CREDIT at a time when the Fed is INCREASING the cost of credit.

All the talk about job creating … Gross National Product … and stock prices … are not issues that resolve the economic suffering of millions of Americans.  Some folks have enough resources to ignore the economic whammy.  For others, it is somewhat troublesome.  For many, it is pure personal hardship leading to financial disaster. 

Team Biden often claims that the people are just not getting his rosy economic message.  It is only a messaging problem, they say.  Actually, it is the folks in Washington who are not getting the message. 

So, there ‘tis.

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry Horist Larry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.


  1. frank stetson

    I thought black Friday cyber was up over 7% and in person up 1%.

    what were they expecting?


  2. frank stetson

    Coffee spew alert: Never take advice from an 80 something with a purported “extensive background in economics who falls into a credit trap and has to work to pay it off. Remember, he’s the guy who pitched Reaganomics gospel in real time, and still does :>) That’s funnier than Spanky. Keyboard cleanup needed in cubicle 3A.

    My oft stated Stetsonian adage on economics: wherever you are in the economy, you have never been there before. Actually, not mine, but to their to the Ronson lighter, an economics teacher of mine. Because he liked to teach, not he needed it, best kind of teacher.

    I like the folksy telling of the personal anecdote which factually, statistically, scientifically, and most important to this author, politically, but adds a certain flair to the story. A personal touch. I find people like stories except the curmudgeons amongst us.

    Some added facts: at the end of October, Americans reached at all-time high for credit ratings, meaning we were good to go to borrow, more and more and more. 718. Mine is 820 with my biggest crime of not having debt for over 30 years. For purchases, I mostly charge everything; I like the protection, the rewards, and have used often. I have only paid like $5 in interest in my entire life because somebody forgot to mail in the check. When I took over household crap as WAH Dad in my mid 50’s, I automated everything finance wise, that I could. FYI on the stat: there was some gaming by the credit bureau’s removing $500 dollar medical bills, and unemployment was low. OK, back to my folksy: I HATE DEBT. I like “fuck you” money. I have only one auto loan, all new mobiles, paid off mortgage at 45. I save like a motherf-er. Son of depression parents, I live the code.

    I call credit card life, living in the time bubble, where time stands still while they wait and wait to get you the bill. It’s mind bending to me to remember you are in the bubble. Two tuitions at once not only gave me a credit ceiling over 30k, but scared the living piss out of me even though it was covered by the 529’s. FYI: going to Disney is living in the safety bubble where all is safe, all is good, all trash immediately picked up (all long as you are not afraid of Mickey porking you).

    Anyone who runs a credit card tab with interest should seek mental health or Guido to get a loan from a shark. I realize some must, but IMO — avoided at ALL costs. Same difference and Guido will train you fast not to borrow to excess. I realize sometimes you must, most certainly the house, but IMO — avoided at ALL costs. I did borrow for my first car; but having recently come into some money because some punk slammed me into a tree disabling my arm, I took an on-demand loan on the nest egg for two points over prime. I would like to say I am brilliant finance guy, but it was Carter years, and I had the nest egg in a cd at 15% but only for year because I feared I might need to be liquid. Stupid kid. See Larry, you’re not the only smart, stupid economist (although I had not studied it yet, just Dad’s Chicago School DNA).

    I pay for everything on my rewards credit card, including utilities, everything. Sometimes on big ones like cars, they only let you put a small amount down. Call the manager, ask for more, there’s almost always wiggle room. At her request, I put my mom in a nursing home on credit, she died before the amount was used, and they paid me off in cash, a check. Meaning I booked all those rewards for nothing! Mom must have been looking down from heaven smiling. That women could squeeze a buck and get two dollars change. I have never seen anyone, except one of my kids, work the cost side of life better.
    The best part of credit cards is protection. Anyone who charges me faces my 800 lb gorilla, Mr. Mastercard, who defends me and gets my money back when I am dishonored. Takes basically a text message, a few months to finalize, credit is immediate, and you do nothing but watch the status. I had a guy delivering hay where I pre-paid for 3 tons, he provided 2 and said the third was coming. Prepay you say? Sure, I have the gorilla. After so long, so many calls, I just threw the credit dispute and no fuss, no muss, no ugly situations, no agita, with a local small businessperson. Most of them don’t want to be blacklisted and Mastercard shares that data. I told him I would do it on our last call IF. I have gotten results from Microsoft of virtual software, that one I was impressed by, and many others. It’s so easy.

  3. frank stetson

    US consumer credit card debt and consumer debt has been very high for some time. I don’t understand it beyond some having to do it and others having a keeping up with the Jones mentality. There is so much M1 money out there, it just does not make sense except for the folks without trying the keep up with the folks with. Horist too notes there’s a lot of folks still trying to catch up and make ends meet and they are suffering mightily in this.

    Second adage: while the market is perfect and will always ultimately reach equilibrium, along the way, a number of individuals may feel a lot of pain. The system being perfect does not help those caught in the crossfire. In other words, left to itself, the economy will move to equilibrium but not everyone will slide into that position easily. That’s where our institutions come in to attempt to soften the blows along the way.

    ““Balances are up 34% from the pandemic low of $770 billion in Q1 2021,” says Ted Rossman, Senior Industry Analyst at Bankrate. “Bankrate recently found that 47% of credit cardholders carry debt from month to month, up from 39% in 2021. Even more troubling is the fact that 60% of Americans with credit card debt have had it for at least a year, up 10 percentage points from two years ago.”

    However, “Just over half of cardholders avoid interest by paying in full each month, so credit cards are working for them, in terms of rewards and buyer protections,” says Rossman. “Rising credit card balances are also good for the economy in the sense that consumer spending powers about 70% of economic growth. Credit card balances are also rising in part due to population growth and because cash usage continues to decline.”

    Wherever you are in the economy…….

    These are some points Horist may have missed plus:
    – Only 50% of debtors pay interest (that’s me!) (all consumer debt)
    – 97% of the debt is current, with only 3% delinquent (all consumer debt)
    – Mortgages account for 82% of the consumer debt, most of which is re-fi’s (this is consumer debt, not just credit card)
    IMO, I don’t have a clue, got me flummoxed, never seen it before, and it’s not like our last credit card bubble. I have never seen anything like it. Should be pause for the cause that a crash is coming, but we have never been here before. Except for the re-fi’s, not sure how to factor this until there are defaults and people go bankrupt. There’s plenty of money, and delinquencies are still low. I am more concerned about Horist reporting bad xmas sales because that bodes ill both for the economy and for my guy returning to office. As I have noted before, xmas sales are then next big stat that keeps me up at night.

    One thing I do know. IN GOD WE TRUST. That is, the whole enchilada is based on trust. Emotions. Feelings. I have seen many a recession or inflation caused by feelings. We basically talk ourselves into it. Now we are scared of inflation, bad economy, even shoplifting. It’s in our nature to pullback, protect, and stand ready for recession which might actually cause the recession.

    Even in a perfect world where people buy as many gifts as usual, I do expect they will defer to lower cost alternatives. So, Omaha Steaks, Purdue Farms, Dakins, and other upper-middle to high-end places will lose business to lower cost alternatives. But people will still buy the same number of gifts. I call that the best outcome. Folks will still spend less, but might be a dip rather than a crash. And will get these businesses that survive, more competitive. That’s a good market outcome.

    The other is we spend less, then people get laid off, and we are off to the recession races — a lack of money. And we hope it’s soft.

    The other bottom line is, folks —- only pay credit card debt if you have no other choice. I mean sell-a-kidney type of choice because that’s what you are paying. Worse yet, you are basically giving it to me who pays no debt but gets all those reward dollars.

    Horist noted “Black Friday fell short of expectations, and retailers are predicting sluggish Christmas sales.” That may be true but Black Friday in person sales increased around 2.5% and online sales by 7.5%. Again, if expectations are missed, remember expectations are rosy for profits. But if there are increases, we may be sleeping, but we aren’t dead yet.

    Again, it’s all confusing, no clear picture, mixed messages. Like I said, best outcome is we pull back to lower cost alternatives but keep buying the same number of gifts. So, high end loses, will need to return to competitive or die, and lower end does OK or better. Watch Walmart and others of this ilk.

    Nice story Horist, I LIKE the personal stories to add to the facts. I wonder who you copied that idea from :>)

  4. Darren

    Frank, it sound to me like you have your shit together!
    How does it feel to be the only Duck standing on solid ground when all the other Ducks are Quacking and floating in water waiting for the big Wave to drown them?
    I am talking about mostly uneducated Voters that vote Dem!
    You push Dem objectives why?
    You practice Conservative values?
    Some people I guess just like to complain!

    • frank stetson

      Darren, sorry, had a more elegant one but got erased somehow…. fair question even with the snark.

      I am not the only duck on solid ground, and it ain’t that solid. I am sorry you like to complain and whine so much but there it is.

      You wondering my political bent, I have noted before I consider myself a Clintonian Democrat, very liberal on social issues and extreme conservative on fiscal issues. I even suggest a metric-based balanced budget for a set number of years or until the metric is met.

      And yes, I have made many financial mistakes including losing a life’s savings. Thank God it was mostly very short-term profit, but boy —- when you can put the M next to it, even if the smallest, possible, fractional version of the M —– that’s memorable. A man should never gamble, more than he’s afraid to lose… Went all in three times in a row. Two times worked. Lucky for me that most was profit on the first two big gambles, but it was memorable. Other loses too including one in China that just disappeared. Plus, I still have a few stocks, dogs in the kennel I call them, including Disney, Verizon, and Ford. Disney does not even pay dividends and I got it before DeSantis and it tanked before he started taking shots.

      That’s my story and I’m sticking to it. Speaking of which, I did buy a little VZ on the side and will be selling today for a nice 5% six month profit. Might be able to go out to dinner on that :>)

  5. andy

    I went bankrupt in 1997 when my credit card debt reached $100,000 on an income of less than $12,000/year throughout the 90’s. (My income is 5 times that today) I learned credit control from that, now I’m down to mortgage only, paying off the cards every month, and trying to pay off the mortgage as fast as i can. But I know I’m in a small group of people like that. Top 40%.

    • frank stetson

      andy, hopefully you refi’d when breakeven points that way on the mortgage. I laughed with my wife as we refi-d 3 or 4 times over our mortgage. I would 1) reach my goal of lower payments, greater cash flow, 2) plow it all back in, even spinning some cash if I could, and 3) take it back to 30 years fixed again.

      Why? I am guessing you can see paying off mortgage early. I did, and so we refi’d like that laughing how we were living the true American of paying less while owing more. Who cares if you add years as long as you pay off early based on the first 30 year date? Got to the point that I did not even know who held the mortgage. Of course, NJ is a State you can do that and not worry, good lending laws up here.

      But look at what noted in credit card rewards. Since you probably can handle the management —- I spin around $1,000 a year in gift cards which can turn into $1,500 if I catch the right sales :>). That’s a lot of free Panera bagels (bought on Tuesday’s baker dozen deals). Utilities, etc. really add up. Likewise, I autopay everything, have my entire budget on line. So, bill from Waste Management comes in, I check my budget, notice a 10% increase. I am retired, have time so call, do my “living on a fixed income, how do you get away with a 10% hike in a 5% inflation world,” they do their “but gas is up more, poor me, poor me,” and after awhile, give me 10% off for six months and which time I will revisit as noted in my calendar to check. So I have it all automated to autopay, credit card when possible. Use budget and calendar to help manage, both online. And it takes far less time now than paying by check, except for the whining, begging, phone call part; that takes some time on hold. I do my email…….

      Money is part real, part fantasy, part game. I tell my kids, learn the rules, play the game but realize you can’t compete with the big guys —- they are stronger, faster, and have access to better information and tools (trading after market hours). So set your sights lower than that, and I am sure they will let you play all day if you want.

      Or just grab the rewards, buy some cds, pay off your mortgage early, and sleep well, sleep contented.