Americans Struggle with Credit Card Debt

FINANCE
Americans Struggle with Credit Card Debt

Americans are falling behind on credit card payments, signaling a warning for the economy. Banks are writing off credit card debt at levels not seen since 2010, totaling $45.7 billion in the first three quarters of 2024—up 46% year-over-year. This trend reflects inflationary pressures and rising borrowing costs.

Credit card balances hit $1.17 trillion in Q3, growing 8.1% from last year. While delinquency rates improved slightly to 8.8%, stress persists for many households despite wage growth outpacing debt increases. Analysts suggest these strains stem from pandemic-era spending catching up to consumers, despite positive indicators like GDP growth and job gains.

Inflation has eased to 2.7% in November from its 2022 peak of 9%, yet prices remain high. Meanwhile, Federal Reserve rate hikes continue to impact credit card interest rates. Trump’s upcoming policies, including tariffs, could exacerbate inflation, limiting the Fed’s ability to lower rates and keeping pressure on credit card users.

FINANCE
Investors Brace for 2025 Uncertainty

The U.S. stock market wrapped up a stellar 2024, with the S&P 500 climbing 23%, driven by AI advancements, easing inflation, and resilient economic growth. This marks the best two-year performance since the late 1990s. However, while the rally has created significant wealth, the outlook for 2025 is more reserved.

The tech-heavy rally saw the S&P 500 hit 57 record closes, with major contributions from the "Magnificent Seven" tech giants like Nvidia and Tesla. Nvidia alone accounted for 21% of the S&P 500’s total returns, pushing its market valuation past $3 trillion. Beyond tech, sectors like financials, utilities, and industrials also posted solid gains.

Despite optimism, investors warn against expecting similar gains in 2025. Elevated interest rates, higher valuations, and uncertainties surrounding potential policy changes under President-elect Donald Trump—including proposed tariffs and immigration reforms—pose risks. Smaller stocks in the Russell 2000 and other non-tech sectors may play catch-up, offering broader market participation.

TECH
Musk Eyes South Africa Expansion Deal

Elon Musk is in talks with South African President Cyril Ramaphosa to expand Starlink’s internet services in exchange for broader investment in the country. The discussions focus on easing South Africa’s regulations requiring companies like SpaceX to be 30% Black-owned. Instead, the government may seek local investment guarantees, potentially including a Tesla battery plant, according to Bloomberg.

Starlink, Musk's satellite broadband service, faces regulatory challenges globally but has expanded to over 100 countries, including Nigeria and Ghana. Musk's push for South Africa comes amid his rising influence in U.S. politics, highlighted by his role in President-elect Donald Trump’s administration and significant campaign contributions.

This isn’t Musk’s first such negotiation. In Indonesia, Starlink provides rural internet, but Musk declined an offer for a Tesla battery plant due to logistical challenges. However, Indonesia is now proposing new ventures, such as data centers for Musk’s AI company, xAI.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.