Today's Top Stories From the Breitbart News Desk
What if we held a recovery and no one showed up?
The Federal Reserve's tally of consumer credit on Wednesday revealed that Americans in July had dramatically pulled back their use of what the central bankers call "revolving credit" (credit cards to the rest of us). After June's explosive growth—an annual rate of 22.3 percent—the pace was bound to come down, but few expected a crash of the sort that actually occurred, with growth falling to just a 4.7 percent rate. Total consumer debt grew by just $17 billion, far short of the $37.9 billion in June or the $25 billion forecast for July.
The causes of the downturn are fourfold. First, consumer sentiment nose-dived in July, presaging an even deeper plunge in August. Second, consumers were hit with much higher prices than expected. Third, the Delta variant sent coronavirus infection numbers soaring across much of the country. Fourth, many of the things consumers wanted were simply unavailable due to supply disruptions.
All four played a role in the decidedly downbeat September edition of the Fed's beige book. From Boston to San Francisco, regional Fed banks reported that businesses were experiencing "pervasive" shortages of key inputs and workers; many were under elevating inflation pressures; and service sector businesses focused on travel, dining out, and tourism were particularly hard hit.
In other words, people are not going out as much and are not spending as much when they do, in part because supply disruptions mean they are not finding what they want available in stores. And that's not a problem another round of stimulus or a few more months of ultra-accommodative monetary policy can solve.
Not that that will stop the politicians and central bankers from trying.
– Alex Marlow & John Carney
Breitbart News Network