The number of Americans now depending on the use of credit to buy the basic necessities has increased significantly. This is one of the scariest stories I have seen in a while. From Bloomberg:
“Consumers, particularly in the lower-income end, are being forced to use their credit cards for everyday spending like gas and food,” said Tavares, who’s based in Atlanta. “That’s because there’s been no other positive catalyst, like an increase in wages, to offset higher prices. It’s a cash-flow problem.”
The swings in purchases of fuel and food have been “dramatic,” Tavares said. The volume of gasoline purchases placed on credit cards jumped 39 percent last month from a year earlier, compared with a 21 percent increase in June 2010, he said. Food shopping increased 5 percent after falling 7 percent last year.
The economy is in bad shape. These are not just bad times for the 9 percent of people officially unemployed — you also have huge swaths of individuals with jobs struggling to make ends meet. Credit allows people to maintain a semblance of their lifestyle for a little while, but eventually those huge bills will come due, with very high rates.
It is amazing that with regular Americans so clearly struggling at this moment, all our “representatives” in Washington seem to care about is pushing austerity packages and cutting seniors’ Social Security benefits.