Is Bidenomics Breaking Down? Credit Card, Loan Defaults Hit 10-Year High

Is Bidenomics Breaking Down? Credit Card, Loan Defaults Hit 10-Year High

Bidenomics breaking

President Joe Biden speaks at a solar manufacturing company while promoting his "Bidenomics" rollout, July 6, 2023, in West Columbia, S.C. (AP/Meg Kinnard)

Americans are falling behind on credit card and car loan payments at rates not seen since the Great Recession, and inflated prices, along with rising interest rates, suggest it could get worse.

Some are blaming Bidenomics, the president’s economic philosophy, which he explained in a June 2023 tweet like this: “Bidenomics is about growing the economy from the middle out and the bottom up, not the top down.”

Biden said the term was created by the media. The White House has taken ownership of the improving economy ahead of the 2024 election.

The first leg of Biden’s economic plan was providing covid relief through the $1.9 trillion American Rescue Plan. Biden hopes to add to the Affordable Care Act and provide 97 percent of Americans with health insurance coverage. And he wants to raise tax revenue by increasing the top tax rate to 39.6 percent, tax capital gains, and raise the corporate tax rate to 28 percent.

The president hoped to forgive student loan debt and make college free for those earning up to $125,000. And Biden hopes to invest in clean energy as part of his $2 trillion American Jobs Plan.

Under Biden, Americans have been hit with higher prices for consumer goods and services while wage gains have not kept up with inflation.

Lower-income earners who have used up their savings from the government’s covid stimulus checks and benefited from paused student loan payments are feeling it the worst, the Washington Post reported.

Since Biden took office and launched his economic agenda, Americans’ credit card debt has increased by almost $300 billion, breaching the $1 trillion threshold for the first time. People living under Bidenomics are also withdrawing funds early from their retirement plans. The number of people who made a hardship withdrawal in the second quarter of 2023 was up 36 percent over Q2 2022, CNN reported.

Biden’s anti-fossil fuel energy stance has been blamed for the skyrocketing price of oil, gas, home heating oil, and natural gas. And because energy is central to most economic activities, this caused prices to go up across the board, wrote Chris Talgo, editorial director at The Heartland Institute, a conservative public policy think tank known for denying climate change and the negative health impacts of smoking

“Bidenomics may be intended to help the ‘little guy,’ but in reality, it is increasing inequality because it is making the rich richer and the poor poorer. No wonder only 33 percent of Americans approve of Bidenomics,” Talgo wrote.

Auto loan delinquencies were at 7.3 percent in Q2, surpassing levels last seen during the Great Recession, but this is mostly affecting independent lenders who operate in the subprime space and lend mainly for used-vehicle purchases, S&P Global reported.

“The interest rate rise is squeezing the monthly budget for the average American consumer,” said Jill Louden, product management associate director for S&P Global Mobility. “Consumers set aside money monthly for housing, vehicles, and insurance, but may not pay other obligations with the same frequency, such as medical bills and credit cards. People need their vehicles to get to work to make money and pay their obligations.”

The rate of new credit card delinquencies was at 7.2 percent in Q2, according to the New York Federal Reserve. When interest rates rise, credit card balances rise.

Shoppers are turning to buy-now, pay-later services to cover necessities such as groceries, Washington Post reported. The industry saw a 40 percent spike in the first two months of 2023, according to data from Adobe Analytics.

Nordstrom, Macy’s and Kohl’s reported that rising delinquency rates on private-label credit cards are hurting revenue.

Many projects made possible by Biden’s Bipartisan Infrastructure Law of 2021 are just now breaking ground, and Bidenomics is claiming credit, CNN reported. There will be hundreds of thousands of signs claiming credit for projects, according to the White House office responsible for the infrastructure signage.