Margin debt in the US continues to rise, setting a new record at $1.02 trillion. An analysis of recent data and economic events leads to significant conclusions about the future.
Growth of Margin Debt
According to FINRA, margin debt in the US reached a record high of $1.02 trillion in July, increasing by $14.6 billion in just one month. This follows a sharp jump in June when margin debt rose by $87 billion, which was also a monthly record. In the last two years, borrowing has increased by $400 billion, a 67% rise that is outpacing equity markets.
US Credit Rating
The US credit rating remains at AA+ primarily due to stable expectations rather than strong indicators. S&P Global reaffirmed the rating, citing the strength of the economy and effective institutional mechanisms. While the outlook remains stable, analysts note that anticipated tariff revenues may offset potential budget shortfalls.
Legal Threat to Tariffs
Currently, the US Court of Appeals is reviewing a case regarding the legality of tariffs imposed by the Trump administration. A decision could be made by the end of August or in September. Should the court rule against the administration, it could dismantle these tariffs, negatively impacting fiscal policy and revenues. The Justice Department has warned of severe consequences if tariffs are removed, including job losses and social repercussions.
Amid rising margin debt and uncertainty regarding the credit rating and tariffs, the future of the US economy remains in question. Analysts will be closely monitoring the situation.
