this post was submitted on 14 May 2024
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162
High Interest Rates Are Hitting Poorer Americans the Hardest (www.nytimes.com)
submitted 1 year ago by MicroWave@lemmy.world to c/news@lemmy.world
9 comments fedilink hide all child comments
 

The economy as a whole has proved resilient amid the highest rates in decades. But beneath the surface, many low- and moderate-income families are struggling.

High interest rates haven’t crashed the financial system, set off a wave of bankruptcies or caused the recession that many economists feared.

But for millions of low- and moderate-income families, high rates are taking a toll.

…

The overall economy has proved unexpectedly resilient to high interest rates. Consumers have continued spending on travel, restaurant meals and entertainment thanks to rising wages and debt levels that, despite their recent increase, remain manageable as a share of income for most people.

But aggregate figures obscure an underlying divide that is likely to widen the longer interest rates remain high. Affluent households, and even many in the middle class, have largely been insulated from the effects of the Fed’s policies. Many took out long-term mortgages when rates were at rock bottom in 2020 or earlier — if they don’t own their homes outright — and most have little if any variable-rate debt. And they are benefiting from higher returns on their savings.

For poorer families, it is different. They are likelier to carry a balance on credit cards, meaning they’re more likely to feel high rates. According to Fed data, about 56 percent of people earning less than $25,000 carried a credit card balance in 2022, compared with 38 percent of those earning more than $100,000. Black Americans, like Ms. Dorsey, and Latinos are also more likely to carry balances.

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[–] xmunk@sh.itjust.works 56 points 1 year ago

Everything economically always hits poor Americans the hardest... this isn't meant to undercut the article - it's important to realize why. But, bear in mind that when interest rates are low poor Americans don't have access to the same low interest loans that upper class assholes use to price them out of purchases.

TL;DR whatever the economic situation, poor people get fucked - when it's lean times they have to tighten their belt the most... and when it's times of plenty they get the smallest piece of the pie - they're always being squeezed and if you understand the different mechanisms squeezing them you'll really want to sharpen a fucking pitchfork.

[–] apfelwoiSchoppen@lemmy.world 43 points 1 year ago (1 children)

Imagine how divorced from reality you must be to not understand that money issues impact poor people the most. NYT readership in a nutshell.

[–] Nougat@fedia.io 8 points 1 year ago

Every problem affects poorer people worse. Because you can use money to buy your way out of problems.

[–] henfredemars 26 points 1 year ago* (last edited 1 year ago) (2 children)

When the cost of capital is virtually zero, do you know who gets hurt the hardest? Once again, the poor! It doesn’t matter whether interest rates are super high or super low. It still sucks to be poor.

What a dumb title. The poor can’t take advantage of low interest rates. They see their homes and shopping centers bought up. Their lives ever more precarious. The title makes it sound like we should lower interest rates. No! That would mainly serve to benefit the wealthy. You need to take specific actions to help these people which are usually to the detriment of the super consolidated business.

[–] Rentlar@lemmy.ca 12 points 1 year ago

S&P is up? Poor people suffer. Is down? Also suffering. Up, down, get it? ... We have the best financial system in the world, because of suffering.

[–] vividspecter@lemm.ee 8 points 1 year ago* (last edited 1 year ago)

They also never seriously look at increasing taxes on those with higher incomes, which would lower inflation more effectively, since they have more room for discretionary spending.

Or reform the tax system altogether to target wealth instead of income.

[–] Lexam@lemmy.ca 11 points 1 year ago

Tired of these articles poo pooing how bad the poor have it in their Ivory Towers insulated from the worries of the world.

But seriously, no shit! That's basically the definition of poor! This is why we need social safety nets and UBI. So they can be in less danger. Which anyone would want unless they are evil. You cannot want to put people in danger because they don't make a high enough wage, and not be evil.

[–] Crackhappy@lemmy.world 1 points 1 year ago (1 children)

While this is entirely true and is deplorable, did anyone else notice the thumbnail guy looks a hell of a lot like Mitch Hedburg?

[–] tacosplease@lemmy.world 2 points 1 year ago

First thing I noticed as well.