Gen Z's Debt Crisis Deepens

FINANCE
Gen Z's Debt Crisis Deepens

As inflation persists and credit card debt hits record highs, buy-now-pay-later (BNPL) services are surging in popularity, particularly among Gen Z shoppers. Adobe Analytics forecasts $18.5 billion in BNPL purchases this holiday season, an 11.4% increase from last year, with $993 million expected on Cyber Monday alone.

BNPL services appeal to younger consumers due to their minimal credit checks and lack of reporting to credit bureaus. However, financial experts warn that using credit cards to fund BNPL plans can lead to compounding interest and fees, exacerbating financial strain. Consumer advocates caution that BNPL’s ease of use often leads to overspending and difficulty tracking multiple payments.

Retailers embrace BNPL for its ability to boost cart sizes and conversions, with studies showing customers spend 20% more when it’s available. Yet, missed payments can trigger penalties, fees, and service lockouts.

With Gen Z credit card balances up over 50% since March 2022, experts urge consumers to view BNPL as debt and manage spending cautiously. “The cost of living is rising, and many are already relying on revolving credit,” says LendingClub’s Mark Elliott. Financial literacy remains critical to navigating these modern payment options responsibly.

ECONOMY
Goldman Warns of Canada Tariff Impact

Goldman Sachs warns of “significant consequences” for U.S. consumers from President-elect Donald Trump’s proposed 25% tariffs on all Canadian imports. The levies, reminiscent of Trump’s first term tactics, could impact fuel prices, refining costs, and Canadian producers, said Daan Struyven, head of Goldman’s commodities research.

The U.S. currently imports around 4 million barrels of Canadian crude daily, enabling American producers to export their oil. Tariffs could disrupt this dynamic, leading to higher gasoline and energy costs, noted the Canadian Association of Petroleum Producers.

While Goldman expressed skepticism over the tariffs’ implementation, citing Trump’s focus on lowering energy costs, the firm emphasized potential risks to U.S. consumers and refiners.

Key insights from the briefing included concerns over Iranian oil supply risks, OPEC’s efforts to maintain a $70 per barrel price floor, and ongoing stockpile refilling by China and the U.S. Goldman reaffirmed its 2025 Brent oil forecast of $76 per barrel.

FINANCE
SoftBank's AI Ambition Expands Further

SoftBank Group is strengthening its commitment to artificial intelligence, planning a $1.5 billion investment in OpenAI through its Vision Fund 2. This new tender offer allows current and former OpenAI employees to sell shares, with a deadline set for Dec. 24. This investment follows SoftBank’s earlier $500 million stake in OpenAI during a $6.6 billion funding round.

SoftBank CFO Yoshimitsu Goto cited the company’s strong financial performance as enabling selective, strategic investments. CEO Masayoshi Son has also expressed optimism about AI's future, predicting artificial general intelligence within three years.

The company’s financial position has improved, with a $7.7 billion profit in the latest quarter, bolstered by gains in Coupang, DiDi Global, and T-Mobile US. SoftBank’s shares have risen 43% this year, fueled by enthusiasm for AI-related ventures, including subsidiary Arm Holdings. This investment underscores SoftBank’s confidence in AI's transformative potential.

Word of the day
Victuals

Victuals is a word with an old-fashioned feel that refers to food, and sometimes to both food and drink.

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.