The market may get a boost when the Senate passes the debt ceiling bill but there are still serious financial issues to manage the rest of this year. I've decided to stay in fixed income for the remainder of the year or until rates are no longer attractive. The taxes are higher but I'm still making a nice income without much concern about the debt nonsense or the upcoming student loan crisis. Here are some rough numbers:
It seems clear that student loan payments will begin again in September. That's $1.75T over 45 million borrowers or an average of ~$39,000 per borrower. In case anyone wants to do the math, @ 6%, that's $8.75B in interest per month. To that number you can add in revolving credit which FRED reports is up from a low of $971B in April of 2021 to $1.24T in March 2023. That's an increase of 28%.
Americans have discretionary purchased themselves into deep debt hole from which they'll have to begin to work themselves out. And all of this is happening while business is slowing. See my next post.
The stock market is a device for transferring money from the impatient to the patient. - WB
