Halloween is a great time for thrillers. Instead of binge-watching horror movies on Netflix, how about some financial facts that can make your hair stand on end? It may not seem like financial facts could be thrillers, but unfortunately, it is too easy to find statistics that can be spun into a spooky narrative. Try these examples of scary stats that are likely to keep you up at night.
- Stuck in Economic Quicksand – Like the intrepid jungle explorer who finds himself up to his knees in quicksand before he realizes it, our economic growth is slowly sinking. The average quarterly GDP growth for the first half of 2016 was 1.1%, compared to an average quarterly growth of 2.6% for 2015. When measured as a change from the previous year's quarterly reading, we are on a steady decline from 3.3% in Q1 2015 to 1.3% in Q2 of 2016. Can we get free of the economic quicksand before the trend continues and we sink below the surface in 2017?
- Nightmare on Student Loan Street – America's collective student loan debt is approaching $1.4 trillion dollars. As of July 2016, there are over 43.3 million student loan borrowers — more debt holders than the total population of over 200 countries — and the average debt per borrower was $28,400.
The combination of a crushing amount of debt and lagging job/wage growth is trapping millennials in their parents' homes, leaving them unable to launch suitable careers and reach economic freedom. Will an economic recovery save the approximately 30% of student loan borrowers that move in with their parents after graduation, or are they forever doomed to live under Mom and Dad's rules? Find out quickly at what rate you can refinance your student loan.
- Debts of Doom – According to the Federal Reserve, total outstanding consumer credit as of August 2016 was just under $3.69 trillion — approximately $11,320 for every man, woman, and child in America. (Keep in mind that this $3.69 trillion does not include mortgage debt.) Even scarier, today's outstanding consumer debt represents a 33% increase over the $2.76 trillion registered at the beginning of 2011. Revolving debt, which is primarily made up of credit card debt, came in at $975 billion (an average of $7,989 per U.S. household) and is growing at approximately the same rate.
This mountain of debt threatens to gobble up our collective savings and crush our retirement plans. How can we escape this ever-growing menace? Will we all be forced into bankruptcy and spend our senior years foraging for food and shelter, or can strong economic growth and wage increases save us? (And if wage growth does save us, will we just spend ourselves into even more debt?)
- Mortgage Debt From the Murky Depths – During the worst of the housing crisis in Q2 of 2012, 12.8 million homeowners were considered seriously underwater, meaning that their loan-to-value ratio (LTV) was greater than 125%. In other words, because of the drop in value of their homes, they owed more than 1.25 times the amount that their homes were worth.
Since that time, America has recovered to the point that only 6.67 million homeowners are seriously underwater — but how long can Americans stay underwater before drowning in collective debt? The surface is in sight, but will they reach it in time?
Not scary enough for you? Consider this fact — barring a change of historical proportions, in January 2017, either Donald Trump or Hillary Clinton will be sworn in as your next President. Does that send chills down your spine?
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