American consumers continued to pile on debt in February, but the pace of borrowing slowed significantly, another sign the economy could be heading toward a recession.
Overall, consumer debt grew by $15.3 billion in February, a 3.8% annual increase, according to the latest data from the Federal Reserve. That compares with an upwardly revised 19.5 billion increase in January. Americans now owe a record $4.82 trillion in consumer debt.
The Federal Reserve consumer debt figures include credit card debt, student loans, and auto loans, but do not factor in mortgage debt. When you include mortgages, US households are buried under more than $16.9 trillion in debt. Household debt charted the biggest increase in two decades in the fourth quarter of 2022.
Credit card debt grew at a much slower pace in February, in line with the drop in retail sales. Lower fuel and energy prices gave consumers some relief, even as price inflation remains elevated. As Forbes reported in February, retail sales that month told a “story of consumers leaning into value and curtailed spending.” The borrowing data confirms this.
Revolving debt, primarily reflecting credit card borrowing increased by $5 billion in February, a 3.8% increase. In absolute terms, it was the smallest increase in revolving credit since April 2021. But credit card borrowing still remains slightly higher than the prepandemic average even with higher interest rates as Americans continue to cope with rapidly increasing prices.
To put the numbers into perspective, the annual increase in 2019, prior to the pandemic, was 3.6%. It’s pretty clear that Americans are still heavily relying on credit cards to make ends meet. Bloomberg reported, “Still, many Americans are leaning on credit cards to keep up with rising prices. A Census Bureau survey in early March showed about a third of Americans said they used credit cards or loans to meet their spending needs.”
Americans now owe a record $1.22 trillion in revolving debt. The bigger problem is the double whammy of rising debt and rising interest rates.
Average credit card interest rates eclipsed the record high of 17.87% months ago. The average annual percentage rate (APR) currently stands at 20.11%. NBC News revealed just the impact of rising interest rates on indebted consumers.
Bankrate data shows it would take 16 years for someone to pay off the current average credit card balance of $5,474 by making the minimum payments at 19.2%. At that point, they would have shelled out $7,365 in interest alone.”
Given that the CPI is still closer to last year’s high than it is to the Fed’s 2% target, the central bank still needs to raise rates higher to slay price inflation. This is going to be difficult given the amount of debt piled up not only by consumers but also governments and corporations. As economist Daniel Lacalle put it, rising interest rates are on a collision course with a wall of debt.
People are already struggling to pay the bill. According to a Moody’s Analytics analysis of Equifax data, nearly 25 million people are behind on credit card, auto loan, or personal loan payments. We haven’t seen delinquency levels like this since 2009.
The growth of non-revolving credit has cratered in the last three months. This debt includes auto loans, student loans, and borrowing for other big-ticket items.
Revolving credit grew by just $10.3 billion in February, a 3.4% increase. This was up from the meager 1.7% increase in December and the 2.2% increase in January, but it remains below the average growth of 5% in recent years.
The plunge in non-revolving credit indicates that consumers have cut back spending on big-ticket items. That could signal that the economy is slowing under the weight of high interest rates.
And now we’re seeing a similar slowdown in credit card debt. Does this indicate Americans are getting close to the end of their ropes?
The American economy depends on consumers spending money. They relied on plastic to make ends meet as price inflation blazed through the economy. Prices are still going up, but a lot of people have to be getting close to their borrowing limit.
So, what happens when consumers max out those credit cards? How will they make ends meet? How will it impact an economy that relies on borrowing and spending to limp along? And how will the Fed slay price inflation without popping the massive debt bubble?
Mainstream pundits and policy analysts don’t seem to be asking these questions. They probably should.
About the Author
Michael Maharrey is the managing editor of the SchiffGold blog, and the host of the Friday Gold Wrap Podcast and It’s Your Dime interview series. View all posts by Michael Maharrey. Article cross-posted from Schiff Gold.
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Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.