Part 2/6:
At first glance, strong consumer expenditure might seem like a sign of economic health—more income, more spending, more growth. However, the reality is more nuanced. The primary driver of this spending isn't necessarily increased income or disposable income. Instead, recent data points to a concerning trend: Americans are borrowing heavily to maintain their consumption levels.
Borrowing and Savings: The Hidden Fuel
Americans are supplementing their income by tapping into savings and accumulating debt. Household debt has soared to a staggering $17.3 trillion, reaching record highs. This includes various forms of borrowing such as mortgages, auto loans, and credit card balances.