Although more Americans are working, consumers may be setting themselves up for future challenges if the economy weakens.
San Mateo, Calif. (PRWEB)
June 29, 2017
The total amount of debt consumers owe continues to rise even as more people are employed and personal income increases. Given the heavier consumer debt load, the recently announced interest rate hike threatens to create a “debt crunch” for American consumers, according to the Freedom Financial Network Quarterly Comment on consumer debt and credit issues.
U.S. employment is strong, with the unemployment rate hitting its lowest point in years. The fewest people in a decade are underemployed or “discouraged workers,” meaning they have completely given up the search for work. However, these figures may not reflect federal immigration and visa policies that affect the numbers of seasonal foreign workers who are often hired for agricultural and tourism work.
While the employment picture is positive, the debt situation is concerning, says Sean Fox, co-president of Freedom Financial Network (FFN). Since February, total consumer debt (excluding mortgages) has risen each month. Moreover, from the first quarter of 2016 to the first quarter of 2017, that figure increased almost $56 billion, a 5 percent rise.
With the Federal Reserve’s recent rate hike – and expected future increases – the cost of that debt will be going up. “Although this takes place at a time when more Americans are working, consumers may be setting themselves up for future challenges if the economy weakens,” Fox explains.
As the average interest rate on credit cards inches closer to 20 percent, interest charges for the average consumer will increase. To put that in…