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In this short clip, Patrick Bet-David, Neil Tyson and Adam Sosnick talk about Americans turning to credit cards to cover basic expenses as inflation rages.
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As inflation rages as inflation Continues to erode purchase and power More Americans are relying on credit Cards to pay basic expenses according to The Census Bureau in December over 35 Percent households use credit cards or Loans to pay for expenses in the past Week of 32 percent in November 21 from April of 2021 interest rates on credit Cards are currently at high levels with The average APR setting a new record Damn is that true 19.14 last week According to bankrate.com if people Carry debt to cover Rising prices they Could end up paying more in the long run As interest charges accrue credit card Balance has increased by more than 15 Percent year on year in November the Largest increase in over 20 years According to New York fed survey Tom What are your thoughts on this we've Been talking about this on the pbd Podcast over the last couple months as Said as those interest rates goes up That the banks would raise the interest Rates on credit cards and raise they did And additionally you've got uh consumers With wage stagnation are turning to the Credit card to pay for things and we saw Some travel going down certainly people Aren't going to be paying to go on Southwest Airlines anytime soon and you Had uh electronics had a bummer Christmas you saw that like big uh you
Know PlayStations big screen TVs and Electronics had a bum Christmas why was That well it's because inflation on core Food stuff and we're also a story in Here about the uh we're at all-time high On food costs that has forced people to Use the only place they could get a Raise to cover is artificial and that's From their credit card the other side of This it's very interesting is that the Um this is directly related to housing People are right now rents are edging up And the housing prices are not dropping As fast so those same consumers are kind Of stuck they can't make a change in Their housing costs like maybe I'll sell My house and lease some thing for a year Let prices come down it's all Interrelated here the pinch is coming And what's even worse is we're seeing Layoffs are going to come February March April we're going to see layoffs pick up So you got consumers that are already Pinched by inflation using their credit Card layoffs are coming so everybody That says there's not a recession this Year it's just not paying attention you Know this it's a hurricane coming ashore And we could talk more about housing in A little bit what's going on there but This is huge Pat this is this is people Are being pinched and we are spinning it In the mainstream media and we are not Talking about the kind of things that
Need to to help the American Consumer Tom why don't you go into housing so What do you see happen in Wood housing What's very interesting right now what's Going on so the because the interest Rates are so high when you put your House on the market it's hard to find The buyers and the housing is sitting There longer so people are not putting That inventory out there if the Inventory was out out there the prices Would go down because there's more Houses out there buyers who could afford The interest rate even though it's six Seven percent actually and eight percent If your credit's not good Um and so the inventory right now is Staying steady so prices are flat when People say oh that's great yeah except If you look at the number of Transactions transactions aren't Happening look at the number of new Mortgages the number of transactions Transactions are down 80 percent last Year 70 last year depending on the Market transactions are down 70 yeah if You take a look at like refi go go look At refi's year over year I think refi's Year over year are almost zero and if You get at real estate transactions now Miami may be a little bit better where We are here Um but transactions in the housing Market
Houses aren't selling and the home Builders you could Toll Brothers Lanier And out there Um Here Rob I'm sending you a link go to This one Go to this website here that's the rates I want you to go to this website it Shows the refinance application the Level index the numbers are unbelievable What it is look at that zoom in a little Bit they're there zero rear 86.2 percent Refinancing is down yeah but by the way But let me let me just put put it to you This way for a loan officer this is what That means if you were making a hundred Grand a month a year ago you're making Thirteen thousand eight hundred dollars And you're probably buying groceries With your credit card if you were a loan Officer a year ago making 10 grand a Month you're making a thousand three Hundred and eighty dollars a month Returning your S-Class and you're Selling your watches you bought for Fifteen thousand dollars for forty two Hundred dollars and you just moved in With your mom yeah Mom and Dad are Loving that yeah this is no joke by the Way this is a real number that's a scary Week over week is 30 yep so when people Say what you're hearing in media housing Prices are steady well yeah but you Can't sell it right the number one thing
And help me out here Adam you know a lot Of people in real estate and sauce talks Money you've got a lot of topics on this That when you're accepting an offer for Your home the number one thing you want Is certainty of clothes you want to Evaluate the buyer is the down payment Real or was it loaned by somebody and Now the mortgage lender is going to Freak out and say wait wait we can't do That you can't be using borrowed money To make a down payment it's certainty a Close right it's appraisal it's Everything that goes through that right Now certainty of close is low because Who who can afford the seven percent Mortgage and what would I do once I sold My house and you're seeing it in a Transaction so the as soon as the Inventory gets out there housing prices Are going to go down what what I and Upad you've been saying this too by the End of this year and I'm still holding To my third quarter and third quarter Fed will drop rates for the first time Probably early third quarter Fourth of July Maybe Fed drops rates for the first time Little more inventory comes out housing Prices come down and that part of the Market moves but in the meantime you Know this and credit cards and the Interest rates on the credit cards Consumers are in for a very very rough
Ride right now and if you're in a Marginalized um uh industry you're Probably also looking at layoffs there's A recession coming and so everybody said Oh it was a soft landing and all this we Haven't landed yet we haven't landed at All we're still in the on the recession And and We're the clicking stage of the roller Coaster click click click click click Click click they haven't dropped yet Everybody's gonna everybody's gonna Raise their hands and scream at the same Time I want to read this to you so it Says the US's chance of dodging a Recession or growing given layoffs Remain low top Moody economists okay he Says uh this is Page Three he says that Maybe we're gonna get past this Recession and it won't even happen uh The US economy May avoid a recession in 20 2023 according to Mark Zandy the top Economist at Moody's Analytics he Pointed to Friday's job report which Showed average hourly earnings Rising by Lower than expected 0.3 percent on Unemployment rate falling To three and a half percent as evidence That companies are not laying off Workers and they added that the wage Inflation falling while employment Remains highs is also good sign for the US economy as people and jobs are likely To spend more and save less feeding into
The economic growth many companies have Put in place short-term thinking Short-term hiring freezes and reduce uh Workers overall hours in an effort to Lower spending so that's what he's Saying and in Greenspan is saying Economist Alan Greenspan and William Dudley have both warned that a recession Is likely coming this year Greenspan Former Federal Reserve chairman stated That a recession is the most likely Outcome while Dudley former New York Federal Reserve president said that U.S Recession is likely due to the federal Reser rate hikes Daryl Cronk Chief Investment officer for wealth and Investment Management greet that Greenspan's prediction and argued that Recession is the likely outcome due to The combination of tightening money Supply and a strong U.S dollar and Falling Bank Reserves however Cronk Disputed Dudley's argument that Federal Reserve red hikes are the sole cost of Potential recession so here's here's a Question I'm on this page I'm with Chris Brown so but why so so but this other Person is making a point saying hey job It's not as bad as you think it is Wages Haven't dropped unemployment dropped to Three and a half percent it's not just Going to be a soft lending we may even Skip it who who has a better argument I Think respect does because I think you
Know The Moody side yeah I I think when You only look at the job side of it you Don't see the capability of the consumer And you don't see what's happening to Consumers own spending the credit cards He is guessing Moody's is guessing in an analytical way I mean using analytics I mean they're Making a guess that oh well we've added 223 000 jobs and and we got all these Our earnings writing 0.3 of a percent How does he even with the straight face Look in the camera and say well you know Earnings have risen 0.3 of a percent From November when you're talking about Seven eight percent annual inflation and We got statistics what's going on in Credit cards credit cards are more Expensive than ever and the banks are Saying hey we're looking at balances or Big those are hard data points so okay You kept your job jobs are flat and Everything but inflation is still up and How are you making up the difference and We just talked about what's happening to The entire mortgage and home buying Industry you know I I don't I don't know I think if you just look at macro jobs I I don't think so whereas the FED looks At the data points of the sectors and Consumer spending and things so I tend To be on the page of Alan and I tend to Look at like the hard data consumers Right now are not having easy time of it
Hard data we didn't have a crazy TV Christmas I mean we didn't have a big Electronics Christmas we had a very soft Christmas at Best Buy What does that say that's hard data so I'm I'm kind of I hope it's not here Pat But I'm I'm fearful that this is a Recession coming and we're going to have Layoffs with it and then the whole thing Starts turning around when we get down To that two percent inflation and then You know Adam what are your thoughts by the way When do you see two percent inflation Being a realistic number uh Jay Powell Says when he can see it in the future That's when he moves it so I I kind of Think he'll be able at mid-year he's Going to be looking toward the end of The year and says you know what I can See two percent inflation from here You know it's funny uh you know what was The word of the year for 2022 was like Gas lighting or I'm shocked that the Word of the year was not transitory how Many times did we hear that word travel It's transitory inflation transitory Janet Yellen Jay Powell everybody Transitory it's a transitory I mean Trans was like probably the word of the Year in 2022 that's a whole thing yeah They're killing that game Um but by the way shout out to Alan Greenspan how old do you think Alan
Greenspan is at this point he's 96 about To be 97 this quarter in March doing his Thing uh but here's what I'll say Because we started off you've seen a few Cycles he's you know he knows what he's Doing he's seen some transitory stuff Um here's what I'll say about because we Initiated this conversation about the Credit cards what a difference a year Makes even when the beginning of coven When everybody was on lockdown you saw All the savings rates were going up Credit card debt was going down people Weren't traveling people weren't Spending all of a sudden people had to Be fiscally conservative this is crazy Right you're getting your whether you're Getting stimulus checks or unemployment Checks people actually had to be like Holy crap what is happening right now Let me get ready for this have a budget In my life so people started Implementing that and then After you know a year or so of lockdown You know fighting on planes people going Nuts travel came back Airlines came back Airline stocks came back travel Cruise Lines everything people started Returning to normal and what is Returning to normal in America taking on More debt baby living paycheck to Paycheck baby that's normal here in America so I am not shocked that these Numbers that came back from credit cards
These ridiculous numbers what is the Season that people start spending the Most money Q4 this is the holiday season Between Thanksgiving you got what is it Uh Black Friday you got Cyber Monday Then you got Christmas season it's New Year's you're spending spending spending Spending like if I'm that this is this Is this might be alarming if I'm that Person that's living paycheck to Paycheck and but but really wants to get Their significant other or family Members toys not this year baby and and And what you have to understand is when It comes to your money it's not a month By month thing it's not even a it's it's You have to look at it year over year Over year because you might have had a a Situation in 2020 where you were able to Actually to save some money and pay down Some debt but in 2021 there it was again Back to your normal that's the return to Normal that most Americans don't really Fully understand is that you're going Back to credit cards so these numbers Are horrible like for someone that made Like me that considers my themselves a Personal finance expert that's my thing Tom you're more macroeconomics you Understand the big picture I like Helping people that make 50 Grand a year 100 Grand a year 200 Grand a year how Can you maximize the most out of your Money and when I see stats like this
It's like of course you're back to Paycheck to paycheck because did you Really need to spend three grand during The holiday seasons and then and then Here's what's going to happen now over The next six months prediction time tax Season is coming up okay what are you Going to do with your refund you I'm Asking you if you get a five thousand Dollar refund does that go into your Roth IRA are you gonna max out your 401K Or is it summer see season coming around A hot girl summer white boy summer now We're going on vacation now we're going To Saint Barts now we're going to Mykonos now we're traveling these Situations that you do with three four Five six ten thousand dollars what you Decide to do with that type of money Will literally change your life but you Have to do it year over year over year Over year but most Americans are living Paycheck to paycheck thinking month to Month they don't have that long-term Vision to to save that money it's a good Point I take you back to your own man on The street interview with a young lady That was down in South Florida using uh Six thousand dollars remember that you Talk to her remember that yes you stand There with a go Cup drinking in front of You and you're asking what are you doing Here are you saving it no no we just Came down here to party man we get some
Free government money habits don't Change but the part that's concerning is Where it says setting a new record of 19.14 last week that's a new record Meaning we've never done that before Okay yeah you have a good point that's Coming off the holiday season which People are spending this is my concern My concern is you know when you're at The uh end of a relationship What you guys are dating and you're kind Of like you're just waiting for the Other person to break up or it's like You're in too deep you know it ain't Gonna go anywhere but you're comfortable You got somebody to hang out with Friday Night Saturday whatever but you know This shit's not going anywhere I don't Know if you've been there before I've Been there before we've all been there So when you're in it You're dragging and you're delaying a Time bomb that's gonna happen instead of Making a decision yeah we are delaying a Time bomb because people are gradually Running out of money all this means with The economy not having hit rock bottom Yet it just means people still have some Savings they're sitting on and they're Waiting before they put their house on The market because they don't have to They're waiting before they sell that Watch because they don't they don't yet Have to so if you like this clip and you
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