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Debt Delinquency Expectations Rising

By on October 9, 2018

According to the latest data from the Federal Reserve Bank of New York, the expectation of missing minimum debt payments took a big jump for people making less than $50K.

This is also true among people with a high school degree or less.

That data seems to show the big difference between the two emerging America’s. While unemployment numbers are celebrated the more important question is what kind of jobs are occupying the time of people.

Lower paying jobs are leaving people with more concern and uncertainty for the future. People earning less than $50K a year are also a bit more pessimistic about an increase in their income in the next year.

More data from the latest findings found:

  • The mean perceived probability of losing one’s job in the next 12 months increased from 13.8% in August to 16.0% in September, its highest level since November 2016. The mean probability of leaving one’s job voluntarily in the next 12 months also increased from 20.6% in August to 23.4% in September, its highest level since August 2016.
  • Households’ perceptions about their current financial situations deteriorated in September, with the proportion of respondents feeling they are better off than a year ago decreasing 2.4 percentage points to 34.9%. This is the lowest level since October 2017. In addition, respondents were slightly less optimistic about their future households’ financial situations, with the proportion of respondents expecting to be worse off financially a year from now increasing 1.1 percentage points to 12.0% in September.

It is interesting to look at the range in earnings among all full-time workers. You will see the average income is around the $60K mark.

While it appears wages are rising from 2014 to 2018 when you factor in inflation they are actually very flat. An income of $58,000 in March 2014 adjusted for inflation would be $61,856 in July 2018. – Source

When you look at historic wage growth over time the trend becomes starker.

Strong consumer confidence in the future that is powered by easier access to credit will create more household debt that will be more difficult to repay with flat or declining wages.

Those conditions will create an advantageous environment for debt relief companies and bankruptcy attorneys.

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About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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