Consumer debt is issue as Fed contemplates rate cuts

NICK GOSNELL

Hutch Post

HUTCHINSON, Kan. — Creighton University economist Ernie Goss said consumer debt is a problem that is getting bigger as prices have risen, even though they are doing so more slowly than they were.

"Those credit card balances are up to record levels, even paying over 20% interest rates on the balances you carry forward," Goss said. "We're seeing this economy right now. We've got the top 20% doing reasonably well, the bottom 80% not so well, and that's where we're getting the hit right now, but as you say, the federal government has been spending, and that's where they've pushed the economy forward. Of course, now the Fed is going to have to pull back some, reining in that, but now they've decided, well, now we've gone too far. We've got to cool it. Let's cut the interest rate now."

The plan is to make a cut in September.

"A quarter percent cut at their meeting on September the 18th is not going to be that big a deal," Goss said. "A second cut, I expect, in 2024, so I expect two rate cuts this year from the Federal Reserve."

There is one thing both major party presidential candidates have in common.

"We're going to see more spending," Goss said. "The question is, how do you pay for it? Probably the Democrats would be more likely to raise taxes, and of course, that would have some negative impacts on the economy. The Republicans are more likely to do other factors, not raising taxes, but increasing the debt. So, you got a little bit of bad for both parties. They're offering solutions that are not very tasteful for the average taxpayer and average worker out there."

Fed chair Jerome Powell said a rate cut at the September meeting would be unrelated to the upcoming presidential election.

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