A prime example is Bernstein’s whitewashing of our nation’s burgeoning credit card debt, which has surpassed $1 trillion for the first time. Even as interest rates soar, Americans are increasingly relying on credit cards to make ends meet. But when confronted with these facts, Bernstein claimed that the financing costs for consumers have declined relative to disposable personal income, which is not true.
Both credit card debt and the interest rate charged on that debt are at record highs. Bernstein’s attempt to dismiss these figures because of the growth in disposable personal income only displays his ignorance of the data—despite its being produced by the very administration of which he is a part.
While disposal personal income has risen 3.8 percent under President Joe Biden, credit card debt has risen 34 percent, and interest rates are up 40 percent—roughly 10 times the increase in disposable personal income. That makes Bernstein’s claim about financing costs on credit cards relative to incomes being lower today mathematically impossible.
The higher interest rate is a vital consideration, because the amount of interest charged on a credit card is a function of both the card’s balance and its interest rate. The combination of more credit card debt and higher interest rates makes it mathematically impossible for financing costs on credit cards relative to incomes to be lower today than before the pandemic, directly contradicting Bernstein’s claim.
And his rhetoric becomes laughable once inflation is considered. Because the buying power of the dollar has declined about 17 percent under Biden, real disposable personal income has declined 8.3 percent.
The higher cost of living means people have less money at the end of the month to pay down their credit cards and other debts.
And it’s the growing amount of consumer debt that is sustaining today’s spending levels, another fact of which Bernstein seems blissfully unaware. While he praised the growth in consumer spending in July, he neglected to acknowledge that there was no income growth that month, meaning the extra spending came from a depletion of savings and an expansion of debt.
Inflation has outpaced wage growth by such a wide margin under Biden that at no time in his presidency have the weekly earnings of the average American worker been able to buy what they could when he was inaugurated.