How stubborn inflation continues to affect consumers

Consumer debt continues to reach high levels as inflation in consumer goods increases pressure on many wallets, especially as many Americans' pandemic-related savings begin to dwindle.

Constantine Yannelis, Professor of Financial Economics at Janeway University of Cambridge, joins Wealth! to provide insights into the situation of consumers in the face of current inflation rates.

“Given the current economic climate, it's not surprising that credit card debt is rising sharply. And we've already mentioned that real wages are stagnant or even declining slightly, as many households simply haven't seen the wage gains that would have kept pace with inflation. As a result, many people are struggling to keep up with higher prices by borrowing more on credit cards.”

He continues, “You're also paying more on credit card debt because the debt is revolving. Interest rates are much higher than they were a few years ago, and that means credit card payments are higher. So it's understandable that we've seen this huge increase in credit card payments.”

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This article was written by Nicolas Jacobino