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Consumer debt climbs as American credit card balances surpass $1 trillion on August 7, 2023 at 9:25 pm Business News | The Hill
Consumer debt grew $17.9 billion from May to June as a credit crunch brought on by Federal Reserve rate hikes drove a sharp gain in the amount of outstanding credit for payments like mortgages and car loans.
The numbers, which are not adjusted for inflation, come in well ahead of expectations at $13 billion and nearly double the increase from the previous month at $9.4 billion.
Debt levels on lump-sum purchases like houses and student loans increased $18.4 billion, offset by a 0.6 percent decrease in the amount of “revolving” credit, which includes things like credit cards and lines of credit.
The dip in revolving credit is catching the eye of economists.
“This is surprising and inconsistent with other data we have on consumer spending in the month,” economist Dean Baker with the Center for Economic and Policy Research told The Hill.
“These data are erratic and often subject to substantial revisions, but if we see another drop in July, that would indicate that some consumers are getting maxed out, and we may be in for a substantial slowing in consumption in the second half of the year,” Baker said.
Overall, Baker said, “the second quarter data shows modest credit growth. It fits with the story of consumption growing at a sustainable pace.”
A customer uses an ATM at a Bank of America location in San Francisco April 24, 2023. Bank of America is being ordered to pay more than $100 million to customers for double-dipping on some fees imposed on customers, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization. (AP Photo/Jeff Chiu, File)
Credit card debt hits $1 trillion for US consumers
Despite the month-over-month decline in revolving credit, credit card debt weighing on U.S. consumers is at an all-time high of more than $1 trillion.
After rising steadily over the last decade, credit card debt levels started easing up in March, 2020, when the government started sending out checks to help households weather the coronavirus pandemic.
They fell by more than $100 billion over the following year, dropping to $736 billion in April, 2021. But then they started rising sharply once again during the booming recovery and are now above their pre-pandemic trend.
Secret spending: Americans are hiding their credit card debt
Total credit card debt is 11.6 percent higher than it was last year, down from a recent high of 18.4 percent last September.
As a share of disposable income, debt service payments are about where they were before the pandemic, hitting 5.7 percent in the first quarter of this year.
Credit card interest rates, along with mortgage rates and other types of financing that rely on charging interest, have been skyrocketing as the Federal Reserve has been raising the rate at which banks can lend each other money.
The average commercial bank interest rate on credit card plans is now above 20 percent, up from just 14.5 percent in February of last year, before the Fed started slowing the economy in response to higher inflation.
That’s the highest level on record for a payment method that is traditionally one of the most expensive ways for consumers to purchase goods and services.
While many measurements of the macroeconomy look healthy at the moment, with second-quarter gross domestic product doing better than expected and inflation dropping fast, it’s not clear that these conditions are extending beyond businesses and improving things for workers and consumers.
Most Americans are living paycheck to paycheck
A recent poll by Lending Club found that a majority of Americans say they are living “paycheck to paycheck.”
“In May 2023, 57 percent of consumers lived paycheck to paycheck,” the poll found.
More than 72 percent of people making less than $50,000 a year live “paycheck to paycheck” while 60.9 percent of people making between $50,000 and $100,000 annually live that way, according to the poll.
Census Bureau data shows that 85.4 million Americans used credit cards to pay their expenses in the last seven days.
The tab is ticking up: Americans owe $1 trillion in credit card debt
Solei Phim, a New York city resident, told The Hill her credit card use has been going up recently for regular expenses including food and laundry. She said she tries to pay her balance off every month so as not to incur interest payments.
“We keep it for the [end of the] month. We try to keep [expenses] within the month and try not to make it past that, but we are using it more frequently,” she said.
Phim added that she put the government stimulus checks she received from both the Trump and Biden administrations over the course of the pandemic into her family’s savings.
Many Americans did the same, leading to a surge in personal savings that gave workers some additional flexibility and likely contributed to high levels of churn in the job market.
Business, News, consumer credit, credit, credit cards, federal reserve Consumer debt grew $17.9 billion from May to June as a credit crunch brought on by Federal Reserve rate hikes drove a sharp gain in the amount of outstanding credit for payments like mortgages and car loans. The numbers, which are not adjusted for inflation, come in well ahead of expectations at $13 billion and…
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The Cities Bracing for Trump’s Immigration Crackdown
In the wake of Donald Trump’s recent election victory and his promise of “the largest deportation operation in American history,” several major U.S. cities are bracing for potentially seismic shifts in their economic and social landscapes. As the nation grapples with the implications of this proposed policy, urban centers that have long been havens for immigrant communities find themselves at the epicenter of a looming storm.
Los Angeles, often dubbed the “City of Angels,” stands to lose more than its celestial nickname suggests. As a primary gateway for immigrants, the city’s vibrant tapestry of cultures and its economic engine could face significant disruption. From the bustling streets of Koreatown to the sun-drenched orchards of the Central Valley, the absence of undocumented workers could leave gaping holes in the city’s workforce and cultural identity.
Across the country, New York City, with its iconic skyline and melting pot reputation, faces its own reckoning. The Big Apple’s 5.9 million immigrants, many of whom are undocumented, form the backbone of industries ranging from construction to healthcare. The potential exodus could transform neighborhoods like Jackson Heights and Flushing, altering the very essence of what makes New York a global city.In the Sunshine State, Miami’s tropical allure belies the turbulent times ahead. Home to 2.5 million immigrants, the city’s economy relies heavily on sectors like tourism and hospitality – industries where undocumented workers often fill crucial roles. The potential deportation of these workers could send shockwaves through Miami’s economic ecosystem, from South Beach’s glitzy hotels to the agricultural heartlands of South Florida.
Chicago, the “City of Big Shoulders,” may find those shoulders significantly weakened. With 1.7 million immigrants in its metropolitan area, the Windy City’s diverse neighborhoods and industries face an uncertain future. From the meatpacking plants to the tech startups, Chicago’s economic resilience could be tested like never before.
In the Lone Star State, Houston and Dallas stand as twin testaments to the complexities of immigration policy. These Texas titans, each home to large immigrant populations, could see their booming economies stumble. The construction sites that dot their ever-expanding skylines and the service industries that keep these cities humming could face unprecedented labor shortages.
Out West, the San Francisco Bay Area’s reputation as a bastion of innovation and progress could be challenged. The region’s tech industry, often reliant on immigrant talent, might find itself grappling with a new reality. From Silicon Valley’s coding campuses to the agricultural expanses of the Central Valley, California’s economic powerhouse could face a reckoning. Phoenix, rising from the Sonoran Desert, could see its growth trajectory altered. As Arizona’s urban center, it stands at the forefront of the immigration debate, potentially facing not just economic impacts but social and political upheaval as well.
These cities, along with others like San Diego and Las Vegas, are not just facing potential economic disruptions. They are staring down the barrel of profound social change. Family separations, community fragmentation, and the erosion of cultural enclaves built over generations are all possible consequences of mass deportations. Moreover, the fiscal implications are staggering. Undocumented immigrants contribute billions in taxes annually, often without receiving the full benefits of their contributions. Their sudden absence could leave gaping holes in city budgets, potentially affecting public services and infrastructure projects.
As these urban centers brace for impact, the debate rages on. Supporters of stricter immigration policies argue for the need to enforce laws and protect American jobs. Critics warn of economic devastation and the unraveling of America’s urban fabric. What’s clear is that America’s cities stand at a crossroads. The coming months and years will likely reshape urban landscapes in ways both visible and invisible. From the foods we eat to the services we rely on, from the neighborhoods we call home to the very character of our cities, the impacts of this proposed immigration crackdown could be far-reaching and long-lasting. As the nation watches and waits, these cities – vibrant, diverse, and economically vital – find themselves on the front lines of a policy that could redefine what it means to be an American city in the 21st century.
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Business
How Trump’s Deportation Plans Could Reshape Major Cities
In the wake of Donald Trump’s recent election victory, his ambitious plans for mass deportations have thrust America’s urban centers into the spotlight. As the nation grapples with the potential implications of what Trump calls “the largest deportation operation in American history,” cities across the country are bracing for significant changes that could reshape their economic, social, and cultural landscapes.
The stakes are particularly high for metropolitan areas like New York, Los Angeles, Houston, Dallas, and Miami, which host the largest populations of unauthorized immigrants. These cities, along with other major urban hubs such as Chicago, Washington D.C., and San Francisco, stand at the forefront of a looming transformation that could reverberate throughout the nation.
Economic Tremors
Economists warn that the proposed deportations could send shockwaves through urban economies. Mark Zandi, chief economist at Moody’s, cautions that businesses would face “significant challenges” if a substantial number of immigrants were removed. Industries such as construction, hospitality, and healthcare—pillars of urban economies—could face severe labor shortages.
Joe Brusuelas, chief economist at RSM, emphasizes the potential ripple effects: “The native-born workforce cannot meet current labor demands.” This labor gap could lead to increased wages, potentially rekindling inflation—a concern that looms large over city planners and policymakers alike.
Community Fabric Under Strain
Beyond economic considerations, the social fabric of cities hangs in the balance. Elena, a Nicaraguan immigrant in Houston, voices a fear echoed in immigrant communities across the nation: “I’m scared… This is my home.” The threat of family separations, particularly in mixed-status households, casts a long shadow over urban neighborhoods.
Immigrant advocacy groups like FIEL are mobilizing, advising clients to prepare for “anything that can happen.” This atmosphere of uncertainty could lead to decreased community engagement and cooperation with local authorities, potentially impacting public safety and community cohesion.
Cities at a Crossroads
As the debate intensifies, cities find themselves at a crossroads. Some, like New York and Los Angeles, have historically positioned themselves as “sanctuary cities,” often at odds with federal immigration enforcement. The impending clash between federal policy and local governance promises to be a defining feature of this new political landscape.
Meanwhile, the logistical challenges of implementing such a massive deportation operation remain daunting. Questions abound regarding detention facilities, transportation networks, and the sheer manpower required to carry out Trump’s vision.
Looking Ahead
As America’s urban centers brace for potential change, the full impact of Trump’s deportation plans remains to be seen. Legal challenges are all but certain, and the resilience of America’s cities will be put to the test.
What is clear is that the coming months and years will be pivotal for urban America. As Jason Miller, a senior Trump adviser, puts it, the plan is to “immediately reinstate” immigration policies from Trump’s first term. For America’s cities, this could mean a period of unprecedented change, challenge, and, potentially, transformation.
As the nation watches and waits, the story of America’s cities in the face of this ambitious deportation plan is just beginning to unfold. The outcome will undoubtedly shape the future of urban life in America for years to come.
Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!
Business
Donald Trump Wins 2024 USA Election
Based on the election results, Donald Trump has indeed won the 2024 U.S. presidential election, defeating Vice President Kamala Harris. Here’s an analysis of the key statistics and implications:
Electoral College Victory
Donald Trump has secured the presidency by winning crucial battleground states and flipping some key states that were previously held by Democrats. The final Electoral College tally is still being determined, but Trump has surpassed the 270 electoral votes needed to win.
Battleground State Performance
Trump’s victory was largely secured by winning several critical swing states:
- Wisconsin: Trump’s win here was pivotal in securing his path to victory.
- Pennsylvania: This state flipped back to Republican control.
- Georgia: Another key state that Trump managed to win back.
- Michigan: Trump successfully flipped this traditionally Democratic stronghold.
Popular Vote and Voter Priorities
While the final popular vote tally is still being calculated, exit polls provide insight into voter priorities:
- Economy and democracy were top concerns for voters.
- Abortion and immigration also played significant roles in voter decision-making.
Congressional Control
The election results extend beyond the presidency:
- Republicans are set to take back the Senate majority, securing at least 51 seats.
- Control of the House of Representatives remains undetermined.
Media Implications
The outcome of this election could be seen as a challenge to mainstream media narratives for several reasons:
- Polling Discrepancies: Many pre-election polls suggested a tight race or even a slight Harris advantage in key states. Trump’s victory, particularly in battleground states, may indicate that polls underestimated his support.
- Narrative Shifts: Throughout the campaign, much of the mainstream media focused on Trump’s legal challenges and controversies. His victory suggests that these issues may not have resonated with voters as much as economic and policy concerns.
- Voter Priorities: The emphasis on issues like the economy and immigration in voter decision-making may indicate a disconnect between media focus and voter concerns.
- Electoral Predictions: Many mainstream outlets were cautious about predicting a Trump victory, even as results began to favor him. This hesitancy could be seen as a reflection of broader media skepticism about Trump’s chances.
- Underestimation of Trump’s Base: The results suggest that Trump’s core support remained strong and potentially grew, despite negative coverage in much of the mainstream media.
It’s important to note that while the election outcome may challenge some media narratives, it doesn’t necessarily invalidate all mainstream reporting. The complex factors influencing voter behavior and the challenges of accurate political forecasting remain subjects of ongoing analysis and debate.
As the dust settles on this historic election, both the media and political analysts will likely engage in extensive reflection on the factors that led to Trump’s victory and the implications for future political coverage and analysis.
Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!
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