Professor Glenn A. Okun
The Rabid Capitalist: The Big Point is a brief summary of a detailed note available to paid subscribers.
The Rabid Capitalist warned its subscribers two months ago that the consumer was about to get into trouble (see https://therabidcapitalist.com/2023/09/12/consumer-wellness-check/). In my September 12 report I said, “The U.S. consumer is about to get sick. The severity of the illness is uncertain. The pathogen is known: high interest rates and debt repayments.”
The trouble has arrived. The consumer is slipping into financial distress. According to the latest Quarterly Report on Household Debt and Credit from the Federal Reserve, aggregate delinquency rates increased in the third quarter of 2023. Total household debt grew by 1.3 percent, reaching $17.29 trillion in the third quarter of 2023.
While the current delinquency level of 3.0% of outstanding debt is still 1.7 percentage points below the rate in the fourth quarter of 2019, it has increased by 0.4 percentage points from the second quarter. The breadth of the deterioration in credit quality is troublesome.
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