The Christian world came to a halt on Monday when, in keeping with tradition, families gathered around recently-hewn fir trees adorned with lights and trinkets to determine the winner of an annual spending contest.
The ceremony, which also entails the perpetuation of a non sequitur about an obese reindeer herder who operates a sweatshop staffed by dwarfs, is a show of fealty to a 2,000-years-dead, self-declared prophet who, were he born in the 21st century, would surely be institutionalized.
Religion’s a helluva bizarre thing. When we’re not busy engaging in objectively nonsensical ceremonies to honor it, or staging elaborate shows of superstition to appease it, we’re killing each other over it. In that regard, we’ve made less than no progress as a species.
One of the more pernicious aspects of Christmas is the extent to which families with no money feel compelled to spend money they don’t have, lest their children should come up empty when their friends ask the question every child living in poverty dreads: “What’d you get this year?”
In the days leading up to Christmas, one mainstream financial media outlet was impolite enough to note that Americans headed into the holiday shopping season sitting on a record pile of credit card debt.
Most readers are doubtlessly familiar with the numbers, but as a reminder, The New York Fed counted nearly $1.1 trillion in card debt at the end of Q3.
Those balances were spread across a record number of open accounts (more than half a billion).
It’s not just credit cards. More and more Americans are apparently relying on so-called “buy now, pay later” schemes — installment plans, basically. Rent-to-own without the threat of someone coming to your house and repossessing your couch. Layaway where you get to take the coat home with you before you make all the payments.
According to Adobe, Americans racked up almost $65 billion in spending using buy now, pay later plans in the 11 months through November. As you can imagine, a majority of that spending (or eventual spending) is concentrated among lower-income households. The concern, obviously, is that those households won’t be able to make the installment payments.
Let’s be clear: On a strict definition of the term “buy,” no one “buys” now and pays later. That’s not what “buying” is. Payment obligations incurred as part of these programs are debt, and as Bloomberg noted, credit bureaus don’t necessarily see the balances.
The implication: Americans have somewhere in the neighborhood of $50 billion in shadow debt. (In addition to the figure from Adobe, the linked Bloomberg article cited a Wells Fargo estimate which put the total at $45 billion through November.)
One common excuse for ballooning balances was inflation. “Was,” past tense. Price growth has slowed materially, so if inflation was the main factor driving nominal balances higher, you’d expect the growth rate of those balances to slow as inflation recedes. But that isn’t happening.
I’ve used the chart above on several occasions. It’s updated with the latest New York Fed credit data and the average headline CPI rate for Q3, when credit card balances grew at a rate that was 13ppt faster than headline inflation.
Frankly, that seems too perilous to be true, which is why, for the last three or so quarters, I was keen to emphasize that the chart is just what it says: The difference between the YoY rate of growth for total credit card balances outstanding and the YoY growth rate of headline CPI measured on an average quarterly basis. Maybe I’m missing something. If not… well, suffice to say there’s more to Americans’ soaring credit card debt than rising prices.
In any case, the world’s most incorrigible consumers will start a new calendar saddled with more than $1.1 trillion in card debt (the rate on which is now 20.74%, according to Bankrate) and at least $50 billion in shadow debt owed to a dizzying array of services no one’s ever heard of.
On the bright side, variable-rate obligations have never been smaller as a share of total household debt in America.
The familiar figure above, also derived from New York Fed data, shows the variable-rate share very nearly fell below 10% in 2021.
You can thank, in no small part anyway, the 30-year fixed rate mortgage, a miracle worthy of its own holy book chapter whereby, with the stroke of a pen and a commitment to a succession of monthly payments lasting nearly as long as the historical Jesus lived, renters are home”owners.”
If you include those “buy now, pay later” plans, the sum of installment payments to which Americans are committed is considerably larger than $50 billion.
Your noted cynicism has ventured into snark in this post. Not a pleasant, nor particularly informative read. You can do much better. Merry Christmas.
I’m heart broken you don’t approve. Can’t you tell?
I don’t know when you folks are going to learn: My cynicism and snark isn’t an act. I’m every bit this person. This isn’t a gimmick for the internet. This is me here, there, online, offline and everywhere else. I’m the genuine article. What you see/read is what you get. If you don’t like it, you know where the door is.
“Don’t go changing
To try to please us,
You’ve never let us down before…..”
🙂
Yeh, I am a Billy Joel fan!
I guess it’s all about how one views their own life and how long they wish to continue that life.
There’s two simple ways of looking at it. A feller can be motivated to either:
1. accumulate stuff and spend a bit of it (limited by a self-imposed budget) until he dies, or
2. incur ever-increasing obligations (bill payments) and work his ass off to keep up with them until he dies.
In the first case, a feller’s probably going to live a lot longer than the second.
And then again, there’s Jesus. He wouldn’t do either. He’d just give everything away.
“Loving kindness, warm hearts, and a stretched out hand of tolerance. All the shining gifts that make peace on earth.”
https://youtu.be/OzRUZYI8XdU?t=44
And after Our Lord’s passing at least one group of his faithful, who also literally gave it all away and did other nasty things like being strict pacifists and ascetics, were labeled by the powers that be as blasphemers and many were put to death lest that strict Christian stuff might really catch on. Remember, for centuries popes had mighty armies.
And that second paragraph was one of the best you have ever penned. Kudos, sir.
This is every bit the usual Heisenberg tone. Might be that he struck a particular nerve of yours, after all sarcasm for a lot of people is only funny until they’re the target of it.
This is a tough time of year for a lot of people…..most people actually
I come for the cynicism and snark
Ditto. Snark and cynicism are too often aligned with discomfiting truth.
Amen…
The truth is that the author as is his right does apparently does not like Christianity. He takes the opportunity as is his right to demean it here. There are a whole slew of horrors perpetrated by the godless of which he is a member along with Trump, Hitler, and Putin. That is the fact. The soul-less are no better than anyone else. That is the truth.
Is this a serious comment? I really can’t tell. It’s not that I “don’t like Christianity.” What I don’t like is human beings killing each other over fairy tales, nor do I much care for the fact that the rules of our societies are in many cases made by reference to the same fairy tales. I’m not “demeaning” anything. I’m just reminding everyone, as I do from time to time, that none of that stuff is real, so when we do real things (like, say, kill each other in the name of works of fiction) we’re demonstrating murderous insanity. Importantly, stating facts can’t really be “demeaning.” It’s no more “demeaning” to the historical Jesus to say he didn’t walk on any water than it is “demeaning” for someone to say, about me, that in fact, I can’t fly or that I’m not immortal no matter how many times I might’ve insisted otherwise while drunk 20 years ago. If everyone would let go of the bullshit they hold onto to as a crutch in this world and start making decisions and policies based on science, reality and common sense, we’d all be a lot better off for it.
After re-reading the article I did get a couple of things mixed up, particularly to your point that you (de-meaned} Christianity. You did not. I am sorry for saying that.
However my “crutch” (belief in God) is not “bullshit”.
Otherwise, I want what you want policy based, science based, reality based, common sense decisions, not a myriad of religious based ones.
I am truly sorry H.
I myself enjoyed the article.
BNPL is predatory lending dressed up in fintech costume. Offering BNPL at grocery stores is horrific. You don’t even build a credit score, and the retirement investment potential of a bag of groceries is pretty nil.
And a partridge in a pear tree
It is the irony (on top of the snark) that makes this a good read. Most of the aforementioned religions (at least Islam and the western religions) take a dim view on charging interest (especially to those who are not well off). That buy now pay later probably hits the bottom 2 quintiles on income harder, is the point.
Is it possible to figure out what the average interest rate on all of this credit debt is? Can you not subtract out the 0%. I am curious about that because really that matters in a world that penalizes people for not having any credit; religious, godless, or otherwise.
Christmas has it’s roots in pagan traditions by the way, so we may have been doing this anyway even if the godless were running the season.
In fact neither the consumerism nor the keeping up with the Joneses part of this fa la la la la are not inherently Christian. I am willing to bet the godless capitalist among us have had a great deal to do with bringing us to where we are along the spectrum.
When I was a wee lad in third grade I was exposed to a wonderful book containing Aesop’s Fables. There were so many good ones. The one that really moved me first was the “Ant and the Grasshopper.” This is a simple tale with very solid advice (the same advice as found in the Bible in the parable of the Seven Fat Years and the Seven Lean Years). Unexpected things happen and one needs to be prepared. From the day my wife and I were married we bought life insurance and started saving every dime we could afford on our gross pay of $680/month. When were got full time jobs as professors, making $21k gross a year, we were saving 15% of our pay and all gifts received from others. I am still an ant, as is my daughter. She and her husband have been fortunate to hold high paying jobs for some years but they have chosen to save all of the pay from the higher paying job and live as they liked from the other job. Now they are fortunate to have been prepared as neither has had had a job most of this year, having been toasted by acquisitions. Their preparation as ants has kept them quite comfortable and their retirement savings in tact. Other than for three cars and three home mortgages (all paid off in under five years) my wife and I never had any debt. If one seeks a life they can’t afford too soon, it’s hard to get out of the hole.
I watch the ads this Christmas season and see how silly they are. They never show ordinary people. The show swanky houses with a couple of Lexus or Benz cars in front; twenty somethings skiing in Vail, dressed in expensive ski outfits; young couples lounging the tropics at expensive resorts; or strolling through Disney World, costing thousands for a family with kids. We have no patience to wait and earn our rewards. As a society too many of us we have seemingly decided to live every day as if it our last. Bad idea.
I was handed down an illustrated book of Aesop’s fables from my older sister. Unlike you, this pre-hippy four-year-old felt very sorry for the grasshopper and felt he was getting treated unfairly.
But those German fables underpin the whole “take your castor oil” Central European inclination towards austerity in the face of a recession. And the intractable opposition to any notion of a universal basic income.
Here in the good ol’ USA we’ve been brainwashed into taking this Calvinist self-reliance creed to new levels: think labeling Medicaid and even Medicare as “medical welfare.”
What you and your progeny are doing is admirable. As a child of Great Depression survivors, I’ve been hardwired in that direction. But I wonder if we have been and are being duped by this ideology which mainly benefits the wealthy?
Hey, who PAID Aseop to write those? An ancestor of our beloved Koch brothers?
derek, when I was a child I figured the whole humble-worship-reward-afterlife thing was invented as mind control for medieval serfs and the like, so that they would toil uncomplainingly in this life to enrich their lords and seek their reward in the next.
BNPL has proven to be a huge boon to my latest business venture started a couple years ago — making giant car-size bows to put around all the vehicles now being purchased and gifted at Christmas in driveways all over the country. I used the money I made convincing everyone who would listen that an “until death do us part” commitment meant 3 months of your salary, or 6 months if you wanted to cheat once in a while.
I’m reading positive articles about holiday spending up +3% per Mastercard data. That is not adjusted for inflation, so zero real growth. Retailers’ expense growth is more than zero real. The post holiday slump could be interesting.
I’ve probably said this before. I’m not a professional money manager.
I’m not even a very good amateur money manager.
I subscribe here because so much of the wit and wisdom I find is an antidote to the crazy making information I’m subject to almost everywhere else.
Religion is a helluva bizarre thing indeed!
These small doses of sanity are a blessing.
I am saddened that you would not be “heartbroken” to see me leave. My comment seems to have hit a nerve through the impervious shell.
Inviting customers/readers who don’t agree with every single sentence you write to find the door is an interesting twist on the ideal of an open and thoughtful conversation. Or maybe you are just preaching your own religion which requires fealty of all. Ironic. Cheers.
Everyone wants to think they “hit a nerve.” You’re not the first person to flatter yourself in that regard over the past seven years, and you won’t be the last. I’d encourage you to consider the far more likely explanation for my response to you and for my snark: I’m just an asshole.
Occam’s razor. Use it.