Recession ‘boiling up from the bottom’; economists are seeing the signs

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Americans have been facing rough economic waters over the last few years, but are happier times ahead or will it get worse before it gets better?

(Video Credit: Fox Business)

Fox Business’s Charles Payne analyzed some recently released economic data, claiming it proves that he was right to reject claims that the power of the consumer has been on the rise.

“The word ‘rejected’ is a word everyone’s starting to hear more and more from their bankers. Here’s the thing, yesterday the New York Fed came out with this report that was really worrisome because this was the banks, how much they reject folks. I’m talking credit cards, mortgages, automobiles,” Payne explained, showing a graph that indicates consumer rejection has been on the rise lately.

“Look at this number, folks. This goes all the way back to about 2014, last time that this many times, you asked for something, they’re like, no, you can’t have it. So what’s going on? Why is this happening? Let me show you more specifically, credit card rejection rates soaring. Mortgage rejection rates, soaring. Automobile loans, look at that. I don’t know when was the last time it was this much?”

Unfortunately, this is resulting in tougher conditions for Main Street Americans, according to economist Brian Westbury.

“We flooded the system with Federal Reserve money printing and spending, handing it out to everybody, and it made everybody feel good,” he said. “But what it really did was drop savings rates well below half of what they used to be back in the 1960s, below where they were in 2019. In other words, everybody’s tapped out. And the reason this is happening is because we believe in Keynesian economics. What that means is we’re just going to give money to people to spend, and then eventually you run out of other people’s money to give them. And that’s where we are. And so what’s happening is this recession that I still think is coming is boiling up from the bottom. Yes, people that own assets at the top, a house, equities, that’s all running through the roof because we’ve inflated it. But people at the bottom are dealing with higher prices, less savings, and not an increase in pay.”

“So this recession, if it comes, it’s going to boil up from the bottom, and we’re beginning to see it. And these delinquencies and turn-down rates that you’re talking about are a clear sign,” the economist warned.