The debt spending binge: Household debt has surpassed record levels reached during 2008 Great Recession.
Debt spending is once again keeping the economy afloat. People are leveraging future income on buying items today on the basis that the economy is not going to have a hiccup. On some reports you see pundits mentioning that delinquencies remain low. Well things were fine too before the Great Recession hit. Once again we are teetering on the brink of a solvency crisis should the economy have a slight turn. People are living beyond their means and banks are gaming the system once again. A recent report by the New York Fed shows that household debt has now reached a new record. What is more problematic is much of the debt increase is coming from student loans, auto debt, and credit cards.
Amazon is annihilating the Department Store faster than you think with 80 million prime subscribers: 4 charts showing the destruction of the department store.
If you enjoy the process of shopping at department stores you may want to get it out of your system sooner rather than later. Forget about the fact that the US has built a ridiculous amount of mall space thinking that Americans were perpetually going to only buy in-person in cavernous florescent light stores. Amazon has set the new model of shopping and how can you beat shopping in your pajamas? After recently purchasing a big piece of furniture online, I can see why department stores are in big trouble. The recent list of retail bankruptcies are only going to grow larger. People have made a conscious decision and are voting with their wallets online. The word of the day is “disruption” and it is happening much more quickly than expected. When you look at these three charts you can see that retail is in deep trouble.
Debt Apocalypse: US Student and Auto Loans Hit New Record of $2.6 Trillion.
American consumers are once again spending beyond their means. Just a few months ago there was a startling headline reporting that US consumers now had over $1 trillion in credit card debt outstanding. That seemed astonishing in itself but now looking at debt levels in other sectors we find that auto loans outstanding are also over $1 trillion. Keep in mind this is for an item that will lose value once it is taken off the lot. You also have student debt over $1.4 trillion which is amazing given many young Americans are working in jobs that really don’t require a college degree. The debt apocalypse is once again upon us and we better hope the economy keeps on running on fumes or we will be confronted with another solvency crisis shortly.
Canada Housing Bubble Pops and Looks Similar to US Housing Bubble: Canada’s Largest Alternative Mortgage Lender Crashes in Dramatic Fashion.
The Canadian housing market is now facing a crisis like moment as the United States did in 2007. While the U.S. housing market did undergo a correction, the Canadian housing market just kept moving up. Canada has one of the largest housing bubbles ever witnessed in North America. People may recall that in the U.S. we had mortgage lenders like toxic junk pusher New Century Financial that imploded in grandiose fashion because of their corrupt and mathematically dubious products that they were peddling to the market. Well in Canada, the tip of the iceberg is now being exposed. Home Capital Group tanked by 60 percent after announcing that it needed emergency liquidity. Of course this is just the start of the correction for our neighbors in the north.
The epic retirement crisis for older Americans: The median family of retirement age has $12,000 in savings.
Given the discussion of 401ks and IRAs you would think that most Americans have a nice nest egg ready to support them into their margarita drinking days on the beach. Yet like most dreams, the reality is very different. Most Americans are broke. The Economist put out some data highlighting that the median family of retirement age has $12,000 in savings. In other words, one minor injury and you are bankrupt. It is a troubling contrast to the image that is portrayed on television and throughout the media of the fully financially prepared family. Life just doesn’t work out that way for most. Unsuspected illnesses, job losses, stagnant wages, inflation, family changes, and student debt all throw a wrench into the plans of most. What is also startling is that this drought in retirement savings is happening at a time when the stock market is near an all time high. So what gives?
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