Americans are currently beset by record levels of debt, and their financial burden could further increase thanks to rising interest rates, inflationary prices and the looming end of the student loan moratorium.
Total household debt climbed to a new high in the second quarter of 2023, reaching $17.06 trillion, with credit card debt exceeding $1 trillion, according to the Federal Reserve Bank of New York. As interest rates stay high, costs continue to rise for expenses like housing and cars, and student loan payments resume, the amount of debt may rise, according to economists who spoke to the Daily Caller News Foundation.
“The amount of debt outstanding, and in particular the surpassing of the $1 trillion mark, is significant and worrisome,” Peter Earle, an economist at the American Institute for Economic Research, told the DCNF. “It owes to a combination of several factors. The initial response to the pandemic, which prominently included the Fed setting policy (interest) rates at essentially zero for several years, made the amount of credit and the price of taking on debt extraordinarily cheap.”
Interest rates for all credit lines are facing upward pressure following the Federal Reserve hiking the federal funds rate eleven times since March 2022, bringing the current rate to a range of 5.25% and 5.50%. Rates were hiked in an effort to combat inflation, which remained elevated in July at 3.2%, ticking up from 3.0% in June but down from 9.2% in June 2022.
“Interest rates on credit cards, car loans, mortgages, and other forms of debt have been shooting up, making the servicing of debt taken at low prices more expensive presently,” Earle told the DCNF.
This pressure could worsen if the Fed decides to raise its federal funds rate once again, with Federal Reserve chair Jerome Powell hinting at the Jackson Hole Economic Symposium that rates will be raised if market conditions do not soften.
“Record levels of outstanding credit card debt is concerning, especially in a time of rising interest rates,” Michael Faulkender, chief economist and senior advisor for the Center for American Prosperity, told the DCNF. “Overall debt burdens for many households are manageable because they locked in record low mortgage rates in 2020 and 2021.”
Future inflation could continue to worsen the debt situation if real wages fail to keep up, increasing real costs for American consumers and thereby putting Americans further into to debt to pay for basic goods. Powell predicted, following the July Federal Open Market Committee Meeting, that inflation would not return to the normal level of 2% until 2025, even with the high interest rates.
“For younger households facing rising rent, restart of student loan payments, and rising credit card debt burden, they are struggling,” Faulkender told the DCNF. “This is exacerbated by the fact that wages have not kept up with inflation and many households are burning through the savings they accumulated during the pandemic. For these households, Bidenomics is a complete bust.”
.@TuckerCarlson and I discuss how half of all Americans live paycheck to paycheck and U.S. credit card debt hits a record $1 trillion. Too many people in this country feel they have been completely abandoned by both parties. It's time to fix this. #Kennedy24 pic.twitter.com/eeFwjpsaUT
— Robert F. Kennedy Jr (@RobertKennedyJr) August 27, 2023
The total balance for student loans fell in the second quarter of 2023 by $35 billion, coming down to $1.57 trillion, according to the New York Fed. The decrease follows a more than three-year hold on payments issued during the COVID-19 pandemic, with interest on balances resuming in September and payments resuming in October, meaning younger Americans could face increased expenditures and an inability to pay off their debts unless personal spending or saving is reduced.
“The return of student loan payments will have a profound impact on many Americans,” Earle told the DCNF. “With one trillion in debt out there and having not had to pay for over three years, tens of millions of Americans will suddenly have to come up with what amounts to another car payment each month. I suspect the effect upon US consumption will be profound.”
Auto loan balances increased by $20 billion for the second quarter of 2023, bringing the volume of newly originated auto loans to $179 billion, according to the New York Fed. Prices have risen for new cars, with only one new model released in 2023 selling for less than $20,000, as opposed to a dozen new models five years ago, with 60-plus-day delinquencies on prime auto loans rising from 0.41% to 0.49% over the course of a year ending in June and sub-prime delinquencies rising from 4.89% to 5.37% over that same period.
“The statistics on auto loan delinquencies are surprising, as they are not only rising but already above pre-Covid levels,” Earle told the DCNF. “And many of those people are facing the return of monthly student loan payments in 30 to 60 days. Add to that persistently high shelter costs and the recent spike up in gasoline prices, and it’s clear that going into September 2023, things are beginning to get tight for the average U.S. consumer.”
Mortgage rates have recently surged to a 20-year high, with interest rates for a 30-year fixed-rate mortgage peaking at 7.23% in August but coming down to 7.18% by the end of the month, according to mortgage giant Freddie Mac. Following the high rates, Americans are opting not to buy homes, with only 4,160,000 existing homes being sold for the month of June, which is far lower than the consistent 6 million existing homes sold per month in 2021.
The economy has had a series of negative indicators recently, with yearly real Gross Domestic Product being revised down for the second quarter and job gains cooling, meaning the Fed may not raise the federal funds rate in September, halting the speed at which interest rates are rising and providing some relief to Americans with debts.
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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.