Despite over 200,000 jobs being created in May alone, the United States has experienced an annual wage growth of just 2.7 percent. Due to this minuscule wage growth, recent data suggests that many American households have piled on additional debt with the expectation of higher wage growth – leaving them with no way to get out of debt.
The Federal Reserve reports that Americans have added $63 billion in debt through the first quarter of this year – bringing total consumer debt to a massive $13.21 trillion as of March 31, 2018. In addition to this, the Federal Reserve reported that there has been a dramatic increase of people who have fallen behind on their credit card payments by 90 days or more, and overdue car loan payments continue to rise.
Nearly 40 percent of Americans possess revolving credit – approximately a quarter of which aren’t able to pay these bills on time. Furthermore, 10 percent of these people have debt in collections, which is up by 3 percent from last year.
The problem lies with the fact that workers are not benefiting from the economic gains experienced by corporations. This year, businesses experienced historic tax breaks; however, workers have not received the pay increases that were expected and promised as a result of these cuts. Expert credit analysts suggest that the expectation of pay increases from tax cuts drove many Americans to take on more debt with the expectation of being able to pay it off.
The consequences of this are drastic. American consumer debt is rising faster than Americans are able to pay it off. Not only does this mean many citizens are going to be experiencing financial hardships for years to come, but lenders are likely going to begin making requirements for loans much stricter.
If you are one of the many Americans affected by enormous consumer debt, consider contacting an experienced debt settlement attorney for guidance. An attorney will be able to help you understand what steps you can take to get out of debt, and may be able to help you reach a debt settlement and avoid bankruptcy. We offer a free consultation to help you explore your options and get back on track.