The Debt Bomb in Middle America, with Ken Brown

the middle class, reads the Wall Street Journal headline. In the article, we meet several responsible, educated, employed families who are making nearly one hundred and fifty thousand dollars a year, yet going deeper into debt with every paycheck. It sends a chill down my spine because it's true, it's widespread, and it might get worse. Here's what's going on. For the last two decades. Incomes have been pretty much stagnant.

Over the same period of time, the average cost of cars, college tuition, healthcare expenditures, childcare, and housing have swelled at an alarming rate. In order to bridge this widening gap between earnings and costs, the middle classes turned to that night and not so shining armor debt, filling the gap between earning and spending is an explosion of finance into nearly every corner of the consumer economy. Is how the

Journal put it. Consumer debt, not counting mortgages, has climbed to four trillion dollars, higher than it has ever been, even after adjusting for inflation. According to the Journal, our appetite for debt has been fueled by a decade of super low interest rates engineered by the Federal Reserve after the last financial crisis, interest rates that by design made it easier for us to spend and made the classic American middle class dream seem affordable. But of course, debt

is a double edged sword. Yes, borrowing can spur spending in economic growth, but if borrowers can't repay, our collective pile of debt may turn into a dangerous economic landslide. There isn't much room for the low interest rates that have facilitated all of this to go any lower, and Federal Reserve data shows that the proportion of credit card balances that are seriously passed due is already on the rise. What will happen if the economy heads into a recession?

The step bomb we are all sitting on raises a whole host of societal questions too, most of all, what does this mean for the beleaguered middle class? Here to help us answer these questions, and mores Ken Brown one of the three reporters on this Wall Street Journal piece that has gotten such a huge response. So, Ken, you've been thinking about debt for a long time. What made

the Wall Street Journal tackle this particular topic. Now you look at the economy, which has done pretty well the past bunch of years, and then you look at how people feel about the economy, and it's not great. There's been this sort of unease out there, and so we were just trying to figure out why, you know, unemployment so low incomes her up decently and we're trying to

figure out why. And when you look at the costs of being middle class, what people expect when you make one hundred and twenty thousand dollars a year, one hundred twenty thousand dollars a year is twice the median household income in the US, and so when you make one hundred twenty thousand, you feel like you should be middle class.

And when you talk to people who feel like that, they can't make it, and so they end up the bottom is falling out somehow right, and so they can't afford a middle class lifestyle a house, two cars, college for the kids, etc. And so we were trying to understand why there was this unease. What surprised you the most in looking into this when you look at consumer debt it's low, like debt to income levels and all that stuff has come down a ton since the financial crisis.

And you scratch your head because you're like, well, wait a minute, people don't feel they're not acting like that. And then you start to look at it and you say, well, okay, the reason debts down it's because mortgage debt is down so much. Mortgage that is down so much because there was so many defaults, and because interest rates so low.

Then you look at student debt, auto debt, credit card debt, it's all at record highs and even if you adjust for inflation, and so what you realize is people are not buying homes like they were, but they're borrowing for everyday things. They're borrowing more than they would have in the past to buy a car, they're borrowing in their credit cards. Student debt, we all know, is up a ton in the past decade. And someone that's weighing on people.

So the data is very compelling once you peel back a little bit of the overall debt data and you look at these areas like credit card debt or auto loans. The average car new car in the US cost thirty seven thousand dollars. The median household income is sixty one thousand dollars. Yeah, the median household incomes. They're not buying

a new car every year. But the reason that works is because there's been this explosion of auto debt, and so auto loans are bigger than ever, they're longer than ever. And one of the trends we wrote about is people don't pay off that car loan. People roll the old car loan into a new car loan and basically keep paying it off. When you look at the surface number, it tells you one thing, and you look underneath and

it's an entirely different picture. Before we get back to breaking down the numbers, what did you hear from the people that you talked to? Did you hear unease, frustration? What was the predominant emotion that came through? Yeah, well, anxiety, fear. It's worse than that, you know. So the stories repeat themselves.

To some extent, we talk to people in that one hundred two hundred and fifty thousand dollars income range because we wanted to talk to It's not necessarily the middle class statistically, but these are people who've done well right. These are people who should be okay, and they fall into two categories. One category is student debt. So a bunch of people graduated school would say fifty thousand dollars in debt, thirty thousand dollars in debt, and they just

can't catch up because they're making their debt payments. Maybe they have a mortgage, maybe they have a car payment, and they just can't get ahead. And so while in the past, you know, most people didn't have a lot of debt when they were young, and then they would take on a house, they'd get a car loan, and the debt would build up, these people are starting out with debt and so then it just builds on itself

and they can't get out from under. The other group that we run into, there's people who've had unexpected expenses, so they have their student debt, or they have a car loan and they have a mortgage or something, and they get hit with something a healthcare costs, erect car, something like that, and it just tips them over the edge and again they can't catch up. Let's break down each of those categories a bet. Why when you look at auto debt, why has it exploded so much? What's

the primary reason for that? Our car is more expensive than we used to. Are we buying more expensive cars than we need? Yeah, so cars are more expensive. So the average new car in the US thirty seven thousand dollars, and the price has gone up steadily over the past bunch of years. And part of it is people want SUVs. People want again the trappings of a middle class lifestyle. I have a couple of kids. Everyone around me has

an suv. Whether you agree that they should buying an suv or not, that's what people are buying, and so that's why the prices have gone up. The auto industry has feasted on this stuff. Auto sales have been up until last year, we had the best four year stretch of auto sales ever in the history, and a lot of it was driven by this consumer debt. So thirty two percent of new car loans are now six to

seven years long. So in the past, the typical new car loan was three to five years, and then you'd have the car for a few years and you without car loans. I mean we all remember, right, you paid down the car loan and you had the car and you didn't have that monthly payment. It was like a great time, and then you hoped the car would last. Well, now there's six or seven years long, and people don't even pay them down. I mean, first they roll over

the old debt into a new loan. The second thing is car leases is the cheapest way to own a car, although you don't really own it. The cheapest way to get a car in terms of monthly payments is to lease. And leases used to account for about ten percent of car sales and now it's about a third. And so again people don't have the cash, and so everything is termed out. Everything is paid over longer periods. With leases,

you kind of pay forever. Right, you have a lease, you go to the next lease, you go to the next lease. I actually never thought about that, and it's really interesting that combination, whether you lease or whether you have a loan, that you now pay back over a much longer period of time. Both me and you never have a period in your life where you're not making that payment, right, it's there every single month, right, right,

And so it's kind of interesting. And you know, you talk to car dealers, which we did, they make more money from the financing of a car than they do from the sale of a car. Everyone knows. You walk into a car dealer, you pretty much know, you have all these services on your phone. You pretty much know what you should be paying roughly for a car. And you know, these guys can do their song and dance, but you can you can kind of look and see

what you should be paying. Then you go into the finance office of the dealership and then they get you into this loan and it's longer term, and it has all these bells and whistles, and the dealer makes more money because they all sell on these loans. They make more money on the loan they do on the car. Wow. And are you hearing when you go and talk to dealers about this, are you hearing any worries from them?

Or are they all excited? Did they think this is an unqualified good thing or do they say, oh, maybe this poses a danger does in the future. They say two things. One is we serve our customers. They want to buy these cars. We're going to get them into this car. You know, you get a customer walks in the door with a car with a five thousand dollars balance on the loan and they want a new car. We're going to get them into that car, they say that,

And so they they're very short term oriented. They want to make the sale. They're quarter to quarter. These guys do not think about the financial health of their customers. Like a mortgage broker in two thousands. They don't own the loan, right The loan goes to carlanders. And it's interesting, so you mentioned mortgage crisis, so we all know all these mortgages went bad and banks got crushed, right, Well, back then, car loans didn't go bad. I mean some did,

but not nearly to that extent. And one reason is because consumers, if you lose your house, you go to rent somewhere and you have a place to live. For most people, you can't get to work without a car. So the last thing you're not going to pay off as a car loan. And the people who don't don't pay off the car loan, they repossessed a car. And so it was a low risk form a lending. So there's been a ton of money pouring into car lending since the financial crisis because it was seen as a

good bet. Because of course, what was seen as a good bet last time has to be a good bet this time around, exactly. And also it's low interest rights. It's hard to make a return on your money, and so car lending is a pretty good way to make a return, especially for people with low credit. And you said, they said two things, So what's the other thing the dealers told you. The other thing is these people want SUVs,

will give them SUVs they want. You know, they can be irresponsible with their money, but you know it's not our job to judge them. Did you think it with the people you talked to were making irresponsible decisions or did you see them more being backed into a corner where they didn't have all that much choice. It's usually

a combination. I mean, so sometimes people spend too much on a car, Sometimes people ran up credit card bills, and sometimes they had unexpected expenses and they thought, wow, I one hundred and forty thousand dollars a year, I can afford all this stuff. So we got a ton of response on the story, and a lot of it was, these people are responsible when I grew up, when I went to college where I didn't borrow, We didn't borrow

back then. Oh he's these answers. And my response to those people was, look, first of all, for the people who grew up twenty thirty years ago, the amount of credit available today is far bigger than the amount of credit that was available back then. I mean, people didn't have lots of credit cards. Car Loans were harder to get, there were no leases. It's credited. I'm thinking of that. Ask our wild quote. Most morality is only the lack of opportunity, maybe in most debt free lifestyles, or only

the lack of credit. Yeah, exactly, exactly. So that's one thing. The other thing is it doesn't really matter whether people are being irresponsible or not. The fact is this debt level out there in the economy, and so the real thing that matters is the US economy is driven by consumer spending. Two thirds of you know, the US economy is consumer spending, and a big chunk of consumers have

been spending by borrowing. And so two things happen. Either they reach a limit, you can't keep borrowing, you've maxed out your credit cards, they won't lend you a more money for a new car. You know you're maxed out, or you'll lose your job, or you get a pay cut, and or you know there's a recession and you can't pay and you default, right, right, So in both cases

it hurts the economy. And so the biggest point we try to make is like, you could say what you want about these people, but you've got to understand that there is an economic cost to this, and policymakers need

to understand what's going on. And you see in the economy, So the economy has stayed relatively strong, and you know, largely because the jobs market has been so great, but you know, when interest rates went up over the last couple of years, we saw hired defaults on credit cards, We saw the housing markets slow down, and so people very sensitive to debt. They've borrowed a lot, they're very sensitive to interest rates, and so that's an economic impact.

I hate just make too many analogies to the financial crisis, although although they're they're right, they're waiting to be made. But there was such a debate about where borrowers and the financial crisis irresponsible, right, And in the end it didn't matter because whether it's a predatory borrower, predatory lender, if there's debt in the system that can't be paid back,

that's that's a massive problem. Right before we get to those broader economic questions, I want to come back to this, the way in which you broke down the categories of debt and tell me about student debt. Were you It's it's been a headline, but were you. Were you surprised by the magnitude of the impact it's had on people's lives. I knew the numbers. We all know the numbers. You see the chart going up and up and up and up and up. But then you talk about the impact

and it just weighs on people. It's just at the time in your life when you are kind of just making it. You have a lot of expenses, You've gotten married, you may start a family, You're you're needing things, you know, and it's a tough financial times. Everyone has a story of I was twenty eight years old and I was down to my last nickel and then something how, you

know whatever. Everyone has that story. But when you have fifty thousand dollars with the debt sitting on you, especially like married couples, you know, eighty thousand dollars whatever, you know, you can't there's no margin for error, and there's no margin for error meeting either screwing something up, having some kind of financial surprise, or spending too much going on a vacation. You know. One of the couples, one of the families we wrote about, deep in debt, really struggling,

and they were slowly getting their arms around things. One of the cars got wrecked, so they had to buy a new car, and then they were invited to three out of town weddings in a row, so airfare, hotels, gifts. They have a young child, so they had to get either childcare or whatever. It was a lot of money.

It was a few thousand dollars, and it went on the credit cards because there's no other way, and so, you know, and then credit cards at twenty percent interest or eighteen percent interest, which they're not paying off anytime soon. It's tough. Yeah. I thought one of the most pointed lines in your story it was a quote from one of the people you talked to, and he said, what

was supposed to be an asset became a liability. And I think that about education and that seems to me to have deeper societal ramifications if people are starting to perceive that this thing, and education is supposed to be all of our goals, has actually become a liability. Did that stand out to you in the same way. Yeah,

I mean people didn't regret their education. They regretted going to private colleges, They regretted maybe not working while they were in school, they regretted taking on so much debt, and they didn't understand it. But again, like when you're eighteen nineteen years old, you don't understand it. And it's also interesting you go back to the financial crisis. You look at the rise in student debt and it picks

up when the financial crisis hit. And you talked to a bunch of experts and they say, look, a lot of people counted in equity in their homes for to pay for college tuition because the home was a piggy bank in the two thousands. Everyone that fascinating connection ten or twenty percent a year. And so you know, you had yourself one hundred thousand dollars in equity in a home or whatever, fifty thousand and that was going to

help pay for college. Once that equity got wiped out and you couldn't borrow against your house, it was tough, and so parents took on student debt and kids took on student debt, and so it's sort of this lingering echo of the financial crisis, and it just left people vulnerable and it's plays out. I had not thought about that, about the connection between the rise and student loan debt and the financial crisis. And what's interesting is that it's

a vicious circle, isn't it. Because you have a lack of home equity means that people have to pay outright for education where they might have been able to finance it with borrowing on their home. And then because people have so much student loan debt, they're not able to buy homes right. And so so this one of the odd components in here is mortgage debt. Right, And were there surprises for you and what you saw on the picture and mortgage debt? People still want to buy homes

the people we talk to. The statistics don't really bear that out. I mean, we've seen a decline in home ownership from the peak, but but people we talked, we still want to buy homes. They feel like it is what a middle class family should do. But one of the things that we have written about, and we'll write about more, is there's been this big rise in the

rent rentals of single family homes. So typically people rent apartments and condos and they own homes, and the economics of trying to rent homes at scale rent a thousand homes has always been really hard. But a bunch of folks brought up homes post financial crisis, big investors, and they have them and they've been very popular. And the people who rent these homes say, listen, our people make one hundred thousand dollars a year. Our tenants make one

hundred thousand dollars. You they're not poor people, but they have no assets. They have debt. You know, when you add up I own X, Y and Z, and I have X, Y and Z debt and it nets out to zero or only a little bit, and so they don't have the money to put down. We talk to a guy at the Federal Reserve who studies this stuff, and he said, you know, buying a home for the average person in the average city is becoming a luxury. It's really a luxury and that is a difference from

the past. I thought it was stunning. I had no idea that Blackstone, the big private equity firm, is now the largest renter of single family homes. That it's really interesting. I thought, I've I've done a fair amount of work on housing, and someone said to me about our broken

homeownership policy. Let them meet rent. And you think about that now, because in the end, right this has huge ramifications, and that it's people's homes that paid for them to retire often, and so what's the spillover effect of a nation of renters who with no assets. One element of this story is income inequality, right, and wealth disparity, and they go hand in hand, but just on the wealth side.

So people accumulate wealth basically in two ways. For the average person, One is they invest in the stock market, bond market, you know, whatever. And one is their own real estate and stocks and bonds and all that are basically the vast majority are owned by the wealthiest people top ten percent own a huge amount of securities, and real estate is owned by the middle class. And so wealth creation for the middle class is depended on real estate. And you go back to post World War two, for

sort of. The three decades after World War Two, real estate prices were up and the middle class did really well, and wealth gap, the wealth gap in the US was pretty was relatively small. You go back to more recent years, the stock market has done much better than housing, and there's been this gap. Now, this is a complicated story.

I don't want to oversimplify. Well, that's fascinating. When you don't own a house, you lose that opportunity both for force savings you're paying down your mortgage and your accumulating equity in the house and appreciation of the asset. And that's how middle class people have made money maybe just like you said, made their retirement for decades. And so if you don't own anything, it's tough to build that up. And the problem is the debt that's gone up. Student loans,

car loans, credit card doesn't help you accumulate wealth. I mean student loans arguably, arguably because you make a higher income. And so yes, that that is. But a mortgage is different. A mortgage. I mean, if you think about it, even if you take on a big mortgage and you work hard to pay it off and you even get in over your head someone if you can stick with it.

You have this house happy set, right, And the house is for most people, if you're law own it long enough, gone up in value, and these other things don't do that, and so it widens the wealth gap. And that's been a political issue and an economic issue. So another component of this that I found really interesting was the way

in which unsecured personal loans are also exploding. And that's got a couple of components, right, It's it's one tells a picture of what's going on with people, but it also tells a picture of this or paints a picture of this ferocious competition between traditional lenders and new upstart lenders. Right, And how how did you guys think about that? Again, interest rate to low, it's hard to make a return.

And one way you can make a nice, sweet return is lending to consumers because they pay higher interest rates until of course they don't pay at all, Right, And so that's the risk you take, and everyone seems to think that that's a good risk. The problem is, as we know, and there's a lot of competition, people make bad decisions, The lenders make bad decisions, and so you have these Silicon Valley financed lenders fintech lenders. You have

golden sacks champions, right. I mean it's interesting and they want to build a deposit base. I have no idea how that's going to play out for them. And then all these banks pulled back on personal lending post financial crisis because it's risky. It's the first thing you don't pay off, right, you know it's insecure. What are they going to do to me? And so you don't pay it's a credit card, right, And they're all doing it again. So's you know, a lot of people trying to find

that market. Did you in talking to people for this, did anybody voice worry about what happens if the recession everybody's looking for hits. The whole premise that people lend and borrow in these markets in these times is they're optimistic. I mean, you don't lend to someone if you're pessimistic, right, and you don't borrow if you're pessimistic. So everyone is optimistic that they'll have a job, that wages will be solid, that the borrowers will pay things off. And so it's

an assumption. And people have made a lot of money being positive and optimistic, right, And people have lost a lot of money being up positive and optimistic, and we don't know what's how it's going to happen. But when you have ten years of economic growth, that's the time when people get sloppy. Right. Historically people do stupid things when they have things have been good for a long time. And so I'm not saying people are doing stupid things.

But you know, what's interesting, as you point out, though, is how different the mood feels than it did. You know, in two thousand and five, two thousand and six, it felt a bulliant, right, and now we've ten years into this supposed, you know, economic growth, and it doesn't feel a bulliant and it's just it's it's really interesting contrast when you think back on how just how the mood of the country feels. And that was one of the reasons we originally got into the story, was like, some

doesn't quite add up. People are feeling nervous, people have I don't want to say they've been cautious, but there's just there's not that ebulence that we saw before from consumers. And I'd like to think we kind of try to sort that out a little bit and explain that definitely. Do you think it's eyes the hands of the Federal Reserve a little bit. I mean, there's an immense amount

of controversy surrounding FED Chairman, your own Powell. Now, right, we've had these low interest rates, totally ahistorical for a longer period of time than anybody would ever have imagined. There's no room for them to go lower. But can they go higher? When you think of what that would mean for all of these households that you profiled, it would be very hard for them to go higher. The good thing in the US is mortgages are mostly fixed rate,

and so that wouldn't hurt so bad. But you know, credit cards, auto loans, either they adjust or people know that I'm they're going to have to borrow to get a car in the next two years, and so they're cautious. It makes people cautious. And we saw it, you some evidence last year that the interest rate increases were biting. I don't know that the consumers were the big reason why the economy is slowing and the FED is cutting rates,

but it's certainly a factor. And the idea that they're gonna be able to get rates back to four percent five percent, right, shocking, right? Not alone the ten and fifteen percent, and that our parents grew up and can you imagine, So you had a line in the story that maybe this is a vote of confidence in the future. That may be borrowing as a sign of confidence in the future. Do you believe that most people will borrow if they feel that they can pay it back, and

so it is a sign of confidence. It may be a misplaced sign of confidence. People may be over confident about how things are. Look we all know from psychology, you know, people extrapolate what they've seen in the recent past into the future, right, And so if the economy has been good, people think it's going to stay good. If the stock market's been down, everyone thinks it's going to keep going down. So it's human nature, and I

think it is a vote of confidence. It just may be misplaced, right, Although it's also another way to look at that, and this is not my thought, I don't remember who said it, but that we've become a nation of basically interest expense rather than rather than principle. So we look at can we pay the interest, We don't think about paying back the principle. And then that would play into your idea that it isn't really that if it's a misplaced vote of confidence because we're not thinking

in terms of the principle. We've been taught for so long to think in terms of the interest, right, No, I think you're absolutely right. I mean, look, so I mean internally, recall this story and some of the other stories you've done. Rent or nation. So you don't own a house. You rent a house. You don't own a car,

your Lisa car. You don't even buy your phone, right, you pay No one buys a phone, you know, you pay it twenty five dollars thirty dollars a month, right for two years, and then you get another phone, so you're always paying your phone. So no one owns anything anymore in the middle class. And that's an exaggeration, of course, but the mentality, just like you said, the mentality changes, so like, Okay, what's my monthly payment, what's my monthly income?

Can I do this? There's no thought of do I want to put away fifty thousand dollars for a down payment on a house? Do I want to put money away from my kids college? So I want to, you know, like really save and think about the future and think about assets. It's just cash flow. It's just in and out. Another example of short termism. Right, So the politicians are talking about many of the Democratic candidates are talking about

student loan forgiveness. Is that just a small piece of the puzzle as you think about this array of debts bread in front of us. Student debt is a trillion and a half bucks. I think it's a big piece of the puzzle because it would take a burden off of the middle class, which would then they would be more money left for them to spend and save and invest.

I think it would be a real game changer for people who really are looking at it a decade of student loan payments in the years where they should be starting to accumulate assets and things like that. Does that, in and of itself have the power to start reversing this trend toward renter nation? Do you think or do you think there are other things that would need to be done concurrently? I think it would go part of

the way to reversing that. I mean, I think someone who has fifty thousand dollars in student loan debt, I think would be happy to take on more debt to own a house and see something for it. I mean, student loan debt is also this weird thing. When you're paying off a mortgage, you're living in the house, When you're paying off a car, you're driving the car to loan. That is like I finished school five years ago, I'm still paying for it. It's like a It's just a

bad way. And of course you're benefiting taxiological, you're benefiting from the education you got, hopefully with the job you have and the income you have. But it's a hard thing and it just is. It weighs on people. And the one thing I'd say is the impact would probably be not as great as the optimists or as the people promoting it think, because the reality is a lot

of people are not paying off the student debt. There's a big default rate, or people are just behind, and then a lot of it is in deferments because people are still in school or whatever. And so the big number that people always read is really not the amount that's getting paid off. It's a much smaller numbers. So the economic impact would probably be small. It would make it would ease a huge psychological burden, but it would make less of a difference in people's monthly cash lot

than than you might expect. Isn't part of the problem too, that student loan debt that if you if you don't pay your loans, they can even come after your Social Security money later on. I mean, it just has so many reverberations. What's really tough is you can get rid of it in bankruptcy. And so, you know, the great thing about US bankruptcy law had been, you know, in a year's past, it gave people a fresh start. It

was awful, but it gave you a fresh start. Now the laws have gotten much tougher and it's gotten much harder to declare bankruptcy, but it's still a way out for people. And you know, you can't get everybody student debt in bankruptcy, and so it's this burden that you

carry with you. So did you, in thinking as you reported this piece and wrote it in the other pieces you've done, did you think, wow, we just need a radical rethink of how we all live and of economic policy or did you sort of shrug your shoulders at it?

What was what was your response? I think we're going to have to address it because at some point, people with this level of debt will reach a limit of borrowing and that's going to hit the economy, and the economy is dependent on contumer spending, and if consumers are not spending, the economy really slows down. And that that's

that's sort of the thing that's sitting out there. I think that's it's a hugely frightening issue lurking over all of this, Right, And it's a double whammy in a sense, because not only does consumer spending slow down, then you have bankruptcies at the same time. Right, that then further slowdown. It will provoke a vicious circle. In other words, Right, what do you make of the fact that this isn't

just a US issue? You spent a lot of time in Asia and you led a twenty thirteen series entitled China's Rising Risks, which highlight highlighted the potential problems called by China's China's rapidly rising debtload in the Journal just did a front page story about the rise in debt in China. Why is that and what does it mean that this isn't just a US issue? China is fascinating and the Chinese economy as a whole. You can have a whole discussion about it. But Chinese economy has been

very debt dependent for a long time now. And at first it was Chinese companies that were borrowing and Chinese real estate developers that were borrowing, but more recently Chinese consumers have been borrowing, particularly young consumers. The Chinese have always been great savers, partially because frankly, it's been a tough place to live for many decades, and people saved

because they had to. You talk to people who are you know, middle age and older in China and they are like, they save every yuan and they invested in real estate, they keep it in the bank whatever. Young people have not done that, and they've been spending every dollar they get. And you know, one of the parallels with the US is it's very easy to borrow in China now. I mean it was not easy to borrow in China a decade ago. As short as a decade ago, really,

people didn't have credit cards people, you know it. It was a cash economy. And now it's an electronic payments economy and you borrow on your phone small amounts very simply. And some of that spending is on goods from American companies. Right. So there's also one of the downsides of a global world.

Is that there's a potential for a boomerang effect there, right, sure, I mean, you know, China is a huge market and companies Apple, Nike, you know, all these companies have done well there, and yeah, some portion of it is debt and Chinese travel, the amount of Chinese going overseas, I mean there's a lot of Chinese, you know, and even when a small number goes overseas makes a big impact. And that's helped the US economy and the global economy.

Travel in Europe, Chinese tour groups are everywhere and they're spending and that's had a big global economic impact. So we might be headed for a huge rethink all over the world. It could be Yeah, I mean again, at minimum, at some point, if people keep borrowing, they reach a limit on how much they can borrow and how much they could spend. And that is the thing that sort of sits out there. And you know it's not only China. The UK debt levels are very high, Canada debt level

is very high, Australia, same thing. Central banks in all those places have said, essentially, consumer debt is a big issue for US. It's hard to raise rates. We really need to watch that, and so it's it's not just the US and China. So it's both reassuring and that it's not just profligate, entitled US citizens, right, but it's also incredibly frightening because it is global, and that means there's no place to turn. Well, thank you so much for all the fantastic work, and thanks for coming to

talk to me. Thank you. As Ken and I talked, I thought about what's been a theme of this podcast, which is short termism. Our own short termism is consumers as we think only about the interest we have to pay, not about the principle, but also business short termism and lending to increasingly cash strapped consumers. The former makes me sad, the latter frankly makes me mad. Will they expect another

bailout when the inevitable recession comes? And a worried little voice in my head also kept saying something has to give and soon. The longer term ramifications of what can called renter nation are ugly. What happens is renter's head into retirement. I've always been resistant to relying on policymakers, but the incentives for us and for businesses have to change, and I think we have to change our behavior. In any event, the economy, the global economy, is going to

undergo some seismic changes. Making a Killing is the co production of Pushkin Industries and Chalk and Blade. It's produced by Ruth Barnes and Rosie Stoffer. My executive producers are Alison McClain no relation in Making Casey. The executive producer at Pushkin is Mia Loebell. Engineering by Jason Gambrell and Jason Rostkowski. Our music is by Jed Flood. Special thanks to Jacob Weisberg at Pushkin and everyone on the show.

I'm Bethany McLain. Thank you so much for listening. You can find me on Twitter at Bethany mac twelve and let me know which episodes you've most enjoyed.