The Weekly Update 1/12/2024
I am not sure why, but lately I have had a number of client family questions wanting to find out what I am thinking about all that consumer debt. The same consumer debt the coneheads on your business news are reporting as, about to devastate our economy.
Clearly the consumer is in deep trouble!
Hang on a second! Yes! A trillion dollars on credit cards sounds like a lot. But, like any thinking person, you need to compare it to something else to grasp the size and scope of whatever it is you are measuring.
In this example, the debt outstanding is against household assets, which backs the debt burden. Thus, $1 trillion in credit card debt against (versus) $148 trillion in household net worth (source: U.S. Federal Reserve), not that big of a deal. This is the press scaring you with “the law of large numbers”. Also, you could choose to compare the current delinquency rate to, say, the last 38 years.
Fact Check Chart:
As you observe the chart above, note that the delinquency rate in all bank loans since 1985 are the lowest on record.
If not for the news sources being so lazy, and in my opinion stupid, they would do the homework I just shared, and report fact based, and source cited facts!
Again, I did not say market valuations go straight up, and I did not say without volatility, yet this data flow, and many more, suggest the good old USA is just waking up from the post Covid hangover. This could be a 10 ticket ride up the net worth curve.
These are just more fact based and source cited data points that will keep The WSG Team continuing to add lower risk, lower volatility, and best-of-class investments to our client family’s asset allocations.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email, or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.