What Growing Consumer Debt Means for the Economy


Written by Philip Diehl

Jun 13, 2024

Here’s something I learned while I worked in Washington, D.C.: When everyone seems to agree on a “fact,” it’s time to get skeptical and go to the data. 

For example, if you follow business news, you know that consumer debt has climbed to levels that warn the economy is headed for trouble. 

But what do the data say?

Look at delinquency rates on consumer loans. Sure enough, after hitting a low of 1.54% in Q4 2021, they’re up to 2.68% in Q1 2024.

That’s a big jump—but if you step back and take a wider view, you discover that today’s delinquency rate is low by historical standards. The average delinquency rate of the last 20 years is about 3%. The average rate over the past 30 years is even higher. Again, the current rate is 2.68%.

Moreover, when you look at the historical data, you see that 2021’s delinquency rate of 1.54% is a huge anomaly. Delinquencies have never been so low in the last half-century—not even close.

Why were delinquency rates so low in 2021?  

You remember those big checks the federal government mailed out during the pandemic? And how you couldn’t leave the house and spend money because of COVID-19? 

One of the things people were doing with all that income and deferred spending was paying off debt, massive amounts of debt. And because people were paying off debt in 2020 and 2021, delinquencies plummeted by 27%, from 2.1% to 1.54%. That’s the fastest decline in at least 50 years. 

So yes—consumer delinquencies are up. And they’re rising pretty rapidly. But now they’re about where they were right before the pandemic, when rates were at historically low levels. 

So why are commentators pulling their hair out over consumer delinquencies? 


Bad headlines sell eyeballs. Nothing is more valuable these days—to media, politicians, and businesses—than public attention. And nothing gets attention like bad news. Even if the reality underlying the bad news is, in fact, good news. 

Gold has thrived during both good and bad economic situations. 

Most companies that sell gold talk almost exclusively about bad news. That’s because they think gold is exclusively a “bad news buy.” That was pretty much true back in the 1990s when I was U.S. Mint Director, but it’s not true today and it hasn’t been true for a long time. 

Not since the economic boom of the 2000s or during the global financial crisis. 

Not as the COVID-19 pandemic erupted or now, during the economic and stock market rallies of the past six months. 

Over the past two decades, gold has performed through hard times and good times. And over the past 8 months, it has gone up $600 an ounce—or 33%. In just eight months

We talk about gold as wealth insurance against hard times. Do you know any other form of insurance that has returned 33% in 8 months? I don’t. 


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