One of our team members received a strange offer recently…
She got a letter from a California-based financial services provider.
The letter offered her a new kind of credit card… they say it’s the first of its kind, backed by home equity.
It works like a home equity line of credit (or HELOC) with a credit card attached.
So you can use the money you repaid to your bank… to spend more.
She immediately shared this with the Cycles Trading team, saying, “Phil, you said it would happen!”
She didn’t take the offer… but a lot of people will.
Growth at All Costs
It’s funny how things always shape up according to the 18.6-year real estate cycle.
We’re now in what I call “The Eleventh Hour.”
It’s the part of the cycle in which the economy grows, land and real estate appreciate, and liquidity is abundant.
This new “home equity credit card” is a sign of the times.
Do you know how much home equity an average homeowner has in the United States?
About $274,000.
And do you know what the maximum limit on this credit card is?
$250,000.
In other words, if you’re not careful with your expenses, you can wipe out almost all of your home equity with it.
…This, of course, would be great for the economy. Consumer spending is responsible for almost two-thirds of U.S. gross domestic product.
So giving people a convenient credit card that can potentially use almost all of their home equity is like giving a hunting enthusiast access to cluster bombs.
The results will be immense.
More Growth Ahead
Data tells me that consumers are optimistic. They are willing to spend.
In fact, consumer confidence in the U.S. has just hit a two-year high.
Unemployment remains low… inflation is slowing down… all this sends consumers signals that they can go ahead and make some big purchases.
Again, this will be great for the economy.
And this extra spending, powered by both traditional and new tools like the credit card we showed you above, will continue pushing the 18.6-year cycle.
For comparison, in the second quarter of 2007, right before the Great Recession, U.S. consumers owed about $2.6 trillion in non-housing debt.
In the second quarter of this year, that number went up 81%. The total is $4.7 trillion.
There’s more leverage in the system now than there was before the Great Recession. And more leverage is coming, in all shapes and sizes.
The U.S. economy isn’t in imminent danger. As I said before, I don’t see a downturn until 2026…
Until then, there’s supercharged growth ahead, powered by things like this “first of its kind” credit card, private credit, Apple’s “buy now, pay later” loans, and more…
And I saw it coming.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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