AI Summary
5 min readThe U.S. consumer, long hailed as the engine of the economy, is increasingly running on credit to keep moving. A new Federal Reserve report, due out tomorrow, is expected to show that revolving credit—mostly credit card debt—rose 6% between May and June. This uptick comes after a dip in May, suggesting a pattern where households are borrowing more to cover everyday expenses as prices stay elevated. While higher-income households are generally keeping up with payments, lower-income families are feeling the strain, having already used up the cushion of tax refunds that helped earlier in the year. The big question is what happens if another economic shock hits.
What happens when the Fed raises rates?
The trajectory of this credit reliance will hinge partly on the Federal Reserve's next move. If the Fed raises interest rates, the cost of carrying credit card debt will likely rise too—not perfectly one-to-one, but in the same direction. Research from the Boston Fed shows that when card rates go up, people tend to borrow less. They might turn to buy-now-pay-later services, borrow from friends, or simply spend less. That reduction in demand could help slow price growth, but it also risks slowing the broader economy. As Marketplace’s Stephanie Hughes noted, the current increase in credit card spending is nowhere near the peak of 2022, when consumers were using plastic to fund "lit
Continue reading the full summary in the app — free to try.
Read Full Summary →Free • No credit card required
Never miss an episode of Marketplace
Get every new episode summarized in your inbox — free, ~5 minutes to read.
No spam. Unsubscribe anytime.
What you'll learn
- 1 (01:08) **Episode Open & Host Introduction** - Sabri Benishor introduces the show from New York on Monday, September 7th, framing the core theme: the US consumer is the engine of the economy, and that engine is increasingly powered by credit.
- 2 (01:58) **Consumer Credit Use is on the Rise** - Marketplace's Stephanie Hughes reports that revolving credit (mostly credit cards) grew 6% between May and June, as consumers use cards to cover the gap between rising prices and slower income growth.
- 3 (04:51) **Job Market Update: Finance & Insurance Shed Jobs Due to AI** - The economy added 160,000 jobs in August, but finance and insurance lost 11,000 jobs, with 99,000 lost so far this year, largely attributed to AI and automation.
- 4 (07:44) **Tariff Refunds Still Stuck for Many Businesses** - The government is refunding tariffs ruled illegal by the Supreme Court, but the process is slow: 40% of the $166 billion owed hasn't been paid, and businesses like Active Style are waiting for most of their money.
- 5 (12:54) **Mexico's New "People's Car": The Olinia EV** - Mexico's government has launched its own line of electric vehicles called Olinia, a low-cost ($9,000), low-speed (30 mph max) city car, aiming to build domestic tech industry and reduce reliance on foreign investment.
- 6 (16:21) **Market Update: Labor Day Closures & Oil Prices** - US markets were closed for Labor Day, but European markets and oil traded. The Japanese yen hit a seven-month high, and Brent crude fell on news of a potential OPEC+ supply increase.
- 7 (19:36) **"Clocked Out" Series: The Emotional Economics of Stay-at-Home Parenting** - Derek Tisdale, a former firefighter now a stay-at-home dad in Ohio, describes the psychological disconnect between knowing his caregiving is invaluable and feeling economically unproductive.
+ Full timestamped outline available in the app
Guests on this episode
Show Notes
Prices are rising faster than average wages in this economy, and many Americans have turned to credit to keep up. They are paying it off for now, but what happens if the Fed raises interest rates later this month? Also in this episode: Artificial intelligence appears to be the cause of some job cuts in the finance sector, business owners along Spain’s Camino de Santiago report busier foot traffic — for better and worse — and the Mexican government rolls out a line of small electric cars.
Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.
Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.
Read the stories in today’s episode:
- Consumers turn to credit as prices rise
- As finance and insurance lose jobs, AI gets most (but not all) of the blame
- This activewear brand says tariffs are still taking a toll
- Mexico launches its own electric car to show it can do more than build for other countries
- A former firefighter reflects on life — and money — as a stay-at-home dad
- How a 1,200-year-old pilgrimage is reshaping local economies in Spain
More from this podcast
Marketplace →