Charts, Bruh: Credit Card Debt and Recessions

Peep these charts, bruh: 




Each of these two sexy-ass charts hold some major key information that could used to forecast where the economy is heading right now:

  1. America’s outstanding credit card debt (debt that exists on credit cards and have yet to be repaid) is at the same level as it was prior to the financial crisis, aka The Great Recession, in 2008.
  2. The number of individual credit cards issued to Americans between 2009 and 2016 has nearly doubled, from $35MM to $60MM. On top of that, the number of individual credit cards issued to Americans is at the same level as it was during the Great Recession. 


Sidenote: The current figure for outstanding credit card debt was at the end of March 2016, was at $951.6 Billion. With an American population of $301 Million people, that means that every American holds at least $3.2 Thousand in debt.  When you consider the fact that there are currently approximately a million homeless Americans, and a 25% slice of the population that is under 18-years old and most likely don’t have credit card debt, every American holds $4.2 Thousand in debt. And that’s a very non-conservative figure considering all of the other people in the country that most likely do not hold credit cards.

So let’s take a quick step back and talk about the differences between two key economic concepts that you need to know whenever viewing economic charts: fundamental analysis and technical analysis. Like extreme Liberals and Conservatives, there are devout FunnyCreditCardsbelievers in each “theory of analysis” that refuse to acknowledge the legitimacy of each other’s approach. Likewise, there are many smart folks out there (ya boy) that use both analytical methodologies in order to analyze data and draw conclusions. Some quick deffies courtesy of Investopedia:

“Technical analysis looks at the price movement of a security and uses this data to predict its future price movements. Fundamental analysis, on the other hand, looks at economic factors, known as fundamentals… At the most basic level, a technical analyst approaches a security from the charts, while a fundamental analyst starts with the financial statements.”

Ok, so now that you know the basic difference between fundamental and technical analysis, you know that the charts above don’t 100% mean that the American economy is on the brink of another major financial crisis. Clearly there were other major economic factors, such as the residential mortgage crisis, that did most of the “heavy lifting” in terms of causing and exacerbating the Great Recession. But there are still some important inferences that can be taken from the charts and used to predict what might be on America’s financial horizon. According to the Wall Street Journal, Americans will finish with more credit card debt by the end of 2016 than they had at the peak of the crisis.

My quick take:

This is not doom. However it is relatively concerning. The mortgage crisis was a result of overextended debt that Americans ultimately could not pay back. Just like mortgages, credit cards are an instrument of debt. On the bright side, credit cards are not a systemic element of the American economy that has such an underlying impact on all of society like the real estate market. On the other hand, if there are enough semi-dangerous elements, growing and churning at an increased rate, such as automobile loans and growing urban unemployment numbers, a confluence of events could ultimately initiate another significant financial crisis.

Only Time Will Tell.



One thought on “Charts, Bruh: Credit Card Debt and Recessions

  1. Pingback: Charts Bruh: Equity Outflows | NO FILTER NETWORK

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