Contrary to narratives touting a strong U.S. economy, mounting debt and rising credit-card delinquencies are creating what one big bond investor describes as a “cocktail of economic risk,” Axios reports.
While the Federal Reserve warns that corporate America is taking on too much debt, rising consumer debt is also a worry. U.S. banks are tightening its lending standards and raising rates on commercial loans and credit cards.
“Borrowers think life is good and income is rising, and … they overextend themselves,” says James Chessen, chief economist at the American Bankers Association. “You tend to see more of that behavior” toward the end of an economic cycle.
Advertisement
