(Daily Caller)—Americans are increasingly falling behind on their debt payments as inflation continues to erode real incomes, threatening to cause many consumers to declare bankruptcy.
Delinquency transitions, debts that were previously being paid but no longer are despite outstanding obligations, rose rapidly in the third quarter of 2023 in all forms of debt except for student loans, according to the Federal Reserve Bank of New York. Poor U.S. economic conditions linked to rising inflation and interest rates have left Americans unable to pay for previous obligations that they once could afford, according to experts who spoke to the Daily Caller News Foundation.
“Consumers pay for things three ways: income, savings and credit,” Michael Faulkender, chief economist and senior advisor for the Center for American Prosperity, told the DCNF. “We know that wages have not kept up with inflation over the last 2.5 years and that many households have spent all of the savings accumulated during the pandemic. Therefore, in order to maintain their spending levels, they have been adding to their credit card balances, such that aggregate balances have now eclipsed $1 trillion. Rising credit card debt in a rising interest rate environment with incomes not keeping pace will put more and more households into financial difficulty, resulting in delinquencies.”
Delinquency transitions for credit cards and auto loans saw the biggest increase among debt forms in the third quarter, rising to 8% and 7.4%, respectively, according to the New York Fed. Credit card debt increased to $1.08 trillion in the quarter, rising 4.7% from the second quarter, when it exceeded $1 trillion for the first time in U.S. history.
Real wages for average Americans have declined since President Joe Biden took office, sinking 2.1% from the first quarter of 2021 to the third quarter of 2023, according to the Federal Reserve Bank of St. Louis. Americans are increasingly turning to their savings to make up the difference in lost wages, with Americans collectively holding $687.7 billion in savings as of September 2023, compared to more than $1 trillion in May and nearly $6 trillion in April 2020.
“It likely indicates that average Americans are not doing well financially,” Jai Kedia, a research fellow for the Center for Monetary and Financial Alternatives at the Cato Institute, told the DCNF. “The quarter-by-quarter increase in delinquencies is probably a signal that the economy is not as good as people thought earlier this year — rather that the hard landing many predicted last year but never came may simply have been delayed.”
An economic soft landing refers to a slowdown in market growth that avoids a recession, as opposed to a hard landing, which would result in a recession, slowing economic growth but also ultimately bringing inflation down. Following the September Federal Open Market Committee meeting, Jerome Powell, chair of the Fed, said a soft landing was not a baseline expectation for the Fed in its fight against inflation.
And credit card (cc) problem stretches across age brackets; all groups seem to be relying on credit cards to make it from paycheck to paycheck, but even cc's aren't enough anymore; in aggregate, this is fastest rise in cc delinquency since the GFC – something's going to break… pic.twitter.com/Cyeu91VAn5
— E.J. Antoni, Ph.D. (@RealEJAntoni) November 7, 2023
“The rise in delinquencies is indicative of increasing strain on consumers,” Peter Earle, an economist at the American Institute for Economic Research, told the DCNF. “Over the past three-and-a-half years, we’ve had widespread unemployment, an uneven recovery, and then both the highest inflation and the most aggressive rate-hiking campaign in four decades. Inflation is still substantially elevated. Unemployment is rising faster now, the economy is slowing under the strain of higher borrowing costs, and bills are going unpaid.”
Inflation peaked under Biden at 9.1% in June 2022 but has decelerated since despite remaining elevated, measuring at 3.7% in both August and September, far from the Fed’s 2% target. In response, the Fed has raised its federal funds rate to a range of 5.25% and 5.50%, the highest point in 22 years, over the course of 11 rate hikes starting in March 2022.
“People respond to incentives,” Kedia told the DCNF. “The government provided massive amounts of fiscal stimulus that was marketed as a one-time gift. People used this windfall to purchase goods and services — perhaps these included down payments on durable items that are now getting difficult to pay back loans on.”
The Biden administration has pushed a number of big government spending bills, including the American Rescue Plan signed in March 2021 that provided $1.9 trillion in stimulus checks, debt bailouts and more. The president also signed the Inflation Reduction Act, which approved $750 billion in new spending, a large amount going to climate initiatives.
“In September 2023, for the fourth month in a row, real spending outpaced real income growth,” Earle told the DCNF. “This suggests that a large and growing portion of recent US spending has been drawn from savings and financed by borrowing. Although wages and salaries increased in September 2023, disposable income declined for the third consecutive month, signaling that American consumers have been saving less to support current and future spending. Not only does this mean that they are living beyond their means, but they are tremendously vulnerable to an unanticipated economic shock.”
The White House did not respond to a request for comment from the DCNF.
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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.