💳😈 Credit Cards = Evil?
Happy President’s Day Weekend Sunday,
I hope you are well. I wanted to share one of my favorite blog posts with you today on how to set goals. It is by Stanford Professor Graham Weaver, and in it he gives you a framework for how to set and achieve goals for your life. By going through this exercise last fall, I was able to identify medium and long-term goals that I wanted to achieve, and it really helped me stay intrinsically motivated. The blog post is linked here, and probably takes 20-30 minutes to complete.
So if you’re feeling unmotivated during the week, try this out and let me know what you think!
Enjoy this week’s Sunday Primer!
— Humphrey, Tim, & Rickie
Market Report
U.S. consumer prices rose sharply in January, with the overall consumer price index increasing by 0.5%, the most in three months, driven by energy and shelter costs. Excluding food and energy, the core CPI rose by 0.4% last month, and both measures were up significantly, at 6.4% and 5.6% respectively, from a year earlier.
The report showed that shelter was the largest contributor to the monthly advance, accounting for almost half of the rise, while used car prices fell for a seventh month. The figures support the recent assertions of Fed officials that they need to hike rates further and keep them elevated for some time, and possibly to a higher peak level than previously expected.
U.S. retail sales rebounded in January, increasing by 3%, the most since March 2021, after a 1.1% drop in the prior month. All 13 retail categories rose last month, led by motor vehicles, furniture, and restaurants. Sales at restaurants and bars, the only service-sector category in the report, increased by 7.2%, the most since March 2021.
Consumer credit card debt in the U.S. has reached a record high of $986 billion in the fourth quarter of 2022, up $61 billion from the previous quarter, according to the New York Fed’s Household Debt and Credit Report.
The figure surpassed the previous high of $927 billion set in the fourth quarter of 2019. The surge in credit card balances marks a shift from early 2021, when the balances dropped by 17% from pre-pandemic levels due to stimulus checks, allowing consumers to save and pay down balances.
However, inflation has driven up the costs of goods and services, while repeated interest rate hikes by the Federal Reserve have pushed credit card rates to nearly 20%, resulting in missed payments and delinquencies. It is expected that credit card borrowing costs will hit a 40-year high in 2023.
Believe it or not, Russia’s war on Ukraine is nearing its first anniversary. Since the beginning of the war, Congress has approved more than $113 billion of aid to Ukraine, with around 60% of that allocated towards defense needs. Now, there’s even talks of the U.S. funding Ukranian pensions and social support.
This all comes at a time when China is increasingly supporting Russia's war efforts. In addition to numerous Chinese surveillance drones hovering over Ukraine, there are concerns that Beijing is considering supplying Russia with arms and ammunition.
What I’m (Tim) continuing to brainstorm is: 1) How much money are we going to pour into Ukrainian support? 2) What is the endgame here? 3) At what point do we start attempting to de-escalate, as it seems that everyone involved is contributing to the escalatory death spiral.
Forecast Ahead
Big Number
“The National Bureau of Economic Research says individuals experience 70% of their overall wage growth during the first decade of their working life; if that period overlaps with a downturn, there’s likely to be a 9% reduction long term.”
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