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As the Economy Recedes, Credit Cards Explode
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As the Economy Recedes, Credit Cards Explode

Credit card debt soars, as proven by recent troubling data, elevating the already dire risks of this intense inflationary recession.

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Steve Cortes
Aug 07, 2022
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As the Economy Recedes, Credit Cards Explode
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Prices surge for consumers at the highest clip in 40 years. The overall Consumer Price Index (CPI) vaults higher at an annualized 9.1% pace, bringing back awful memories of the malaise and stagflation of the 1970s under Jimmy Carter. But actual realized inflation for most citizens stings far worse, especially for those of modest means. The combined inflation ascent for the “have to” non-discretionary items of Gasoline, Groceries, and Utilities rose in June at an astounding 37% rate as a basket.

How have consumers dealt with these skyrocketing prices? The simple answer, unfortunately: via credit cards, particularly for working-class households. Just last week, the Federal Reserve Bank of New York issued a damning report on this credit binge for consumers, into a pronounced economic slowdown.

Total consumer debt rose a staggering $40 billion in June, far surpassing Wall Street expectations of a $25 billion increase.

This torrent of borrowing continues the sharp trend of increased consumer indebtedness under Biden, see this chart with figures from the Fed since he took office:

Source: Trading Economics

A huge portion of this new debt flows from costly, risky credit card use. In fact, for the April-June second quarter of 2022, total credit card debt rose a staggering $46 billion, the biggest jump in 20 years. Americans pile into new accounts to accomplish this borrowing, opening up a whopping 233 million new cards during that second quarter, the most new cards since 2008. Such comparisons to the Great Recession should worry everyone.

So, stressed and strapped Americans reach for a mountain of credit to pay for the inflation mess created by Biden, Pelosi and collaborator Republicans like Mitch McConnell. The prior savings that had been practically forced by the lockdowns have vanished. In fact, the personal savings rate just plunged to the lowest levels since 2009, another tragic comparison to the economic carnage of the Great Recession.

So, when corporate media charlatans grandstand and pretend that last week’s positive Jobs report signals some “all clear” for the economy, consider the bigger picture. First, recognize that the report – which was thankfully a solid one – represents a return of the masses of jobs lost to the lockdowns and the CCP Virus, not real net new job creation.

But even more importantly, note that every key forward looking indicator signals not just recession, but a very deep one.

Specifically, consider these three key metrics:

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