Leading economist warns Americans to ‘hide’ and ‘save a dime’ from a possible recession – after households were found to be spending $709 more a month than they were two years ago
- Economist Nancy Lazar warned Americans to prepare for a looming recession
- “Save your money because unfortunately the economic outlook will get worse before it gets better,” she said
- It comes as America’s credit card debt has surpassed $1 trillion for the first time in history
Now is the time for Americans to “hide down” and “be careful with their spending,” warned a leading economist.
Nancy Lazar, chief economist at investment firm Piper Sandler, issued a strong warning to Americans to rein in spending after households were found to be spending $709 more a month than two years ago.
“Save your money because unfortunately the economic outlook is going to get worse before it gets better,” Lazar told Fox News Digital.
“Be conservative and be careful with your credit cards.” It’s time to hunker down and try to hold onto your savings rather than get into more debt.”
America’s credit card debt has surpassed $1 trillion for the first time in history, according to the Federal Reserve.
Federal Reserve data shows America’s credit card debt has surpassed $1 trillion for the first time in history
Credit card balances rose $45 billion in the second quarter of the year as interest rates — recently hitting their highest levels since 2001 — and rampant inflation continue to squeeze households.
Lazar described the economy as “overheating” and said price levels remained “extremely high”.
The annual inflation rate edged up to 3.2 percent last month and edged up slightly in July, compared with June’s 3 percent annual increase.
“It’s not just restaurants that have increased prices significantly, but also grocery stores that are creating a cost-of-living crisis for many people in the country today,” she said.
An analysis by Moody’s Analytics found that inflation is forcing Americans to spend $709 more a month on essential goods and services than they were two years ago.
To lower the price level, she added: “Unfortunately, it usually takes a complete drop in economic activity or a recession.”
“Consumers have every right to protest these higher prices.” Increasingly, they are seeing consumers shopping less and buying less in grocery stores.’
According to Lazar, a looming recession will put pressure on all wealth groups in the US.
“It’s not just going to be low-wage workers who get laid off.” “It’s going to be widespread,” she said. “But it’s better if we accept this short-term setback in order to bring the price level back to normal.”
Lazar said that in addition to inflationary pressures, the economic recovery also depends on managing the budget deficit.
“We need to cut government spending and do entitlement reform, including Social Security reform,” she added.
The US debt has surpassed $31 trillion – after the House and Senate passed legislation in June to avert a catastrophic national bankruptcy within days.
US inflation rose to an annual rate of 3.2 percent – a slight increase in July from June’s 3 percent annual increase
The added pressure on household budgets has increasingly forced Americans to take extreme measures to cover their spending.
A Bank of America report earlier this month found that the number of workers using “emergency withdrawals” from their 401(K)s rose 36 percent.
And according to the latest Fed data, there are 578.35 million credit card accounts in the US. That’s an increase of 5.48 million from the end of last year.
The average interest rate on credit card balances is also near a record 20.53 percent, according to Bankrate.