The debt bomb is ticking

This from Bloomberg’s David Rovella today: 

The miracle that is the post-pandemic US economy keeps chugging along, but there’s a big problem just below the surface, and it’s only getting bigger: debt. Outstanding US consumer debt surged by the most on recordin December, reflecting massive increases in credit-card balances and non-revolving credit. Total credit jumped $40.8 billion, according to Federal Reserve data released Friday. The figure, which isn’t adjusted for inflation, topped all estimates in a Bloomberg survey of economists.

Outstanding credit-card and other revolving debt increased $22.9 billion in December, more than reversing the prior month’s decline. Non-revolving credit, such as loans for vehicle purchases and school tuition, climbed $18 billion, the most in two years. The delinquency rate has risen, too, with some 3.5% of card balances past due by 30 or more days and 1.8% of accounts delinquent. Both figures are more than double the post-pandemic lows recorded in 2021.

Consumers can accrue debt at this level because foreigners keep lending the US mountains of cash, which is why we can finance our vast national debt along with our impressive deficit without suffering a sovereign debt crisis. But that halcyon period is likely coming to an end as deficit hawks swoop in and stop the carousel. The most dangerous time in the life of a bad government is when it seeks to reform.