Americans Have started to Lose Access to Cheap Credit

The days of abundance are ending in the United States as consumer spending falters due to rising interest rates, persistent supply chain problems, and ongoing inflationary pressures.

People just aren’t making enough money to continue buying things the way they once did, especially as cheap and easy credit becomes a thing of the past. Savings accounts are draining as consumers struggle just to make ends meet, and still the numbers are dismal.

Over the past four months, consumer spending, the engine of the American economy, has done nothing but fall. Spending on rent, bills, and haircuts ran flat in December – and after adjusting for inflation, it actually declined to the worst monthly reading in almost a year.

Existing home sales fell all last year to their lowest level since 2014 amid rising mortgage rates. And the auto industry isn’t doing any better as the sales dropped to their lowest level in more than a decade.

"Consumers are likely retrenching during a time of economic uncertainty," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina. "The trajectory for the economy is weakening and recession risks are rising for 2023."