(Epic Economist)—This is not just a credit crisis. It’s the beginning of a downturn that will change our lives. The credit crunch is about to trigger a huge spike in bankruptcies in the United States, and millions of Americans are likely to lose their jobs as a result. That’s according to Goldman Sachs and other Wall Street banks that warned about the impact of the Federal Reserve’s disastrous policies this week.

Right now, the largest banks in America are extremely worried about rising loan delinquencies and defaults. That’s why they are borrowing less money from U.S. businesses and consumers. At such elevated interest rates, the probability companies and individuals will end up falling behind on their loan payments is really high, and so is the risk of banks facing even bigger financial losses.

They’re trying to preserve their integrity after the meltdown that shook the industry back in April, especially as more indicators point to increased turmoil in the next few months. By cutting lines of credit, these banks are trying to stop the bleeding before it gets worse. But on the other hand, they are setting the stage for an unprecedented spike in business bankruptcies as they cut an important lifeline for struggling companies. Since the pandemic, Main Street has been feeling the pinch of conditions that haven’t improved materially up until this point.

Data from the S&P Global shows that 2023 corporate bankruptcies are rising at an alarming rate. Researcher and economist Peter St Onge blamed the problem on one key facet: “It’s simple. Banks aren’t lending,” St Onge said. Just in the first half of 2023, the number of corporate bankruptcies in the U.S. shot up by 216%, the highest year-over-year increase since 2008. A UBS report also found that bankruptcies worth $10 million or more had a rolling average of about 8 per week.

Meanwhile, Bank of America is concerned about what will happen to the U.S. consumer as a result of these policies. In March, analysts warned that the Fed would push consumers to the “point of pain” in order to tame inflation. And now, according to Bank of America’s CEO, Brian Moynihan, that time has come.

During an interview with CNBC, Moynihan said the way consumers are acting is consistent with the behavior seen right before crises erupt. In a given year, Bank of America customers spend $4 trillion dollars — be it using a debit or credit card, writing a check, confirming a bank transfer, or taking cash out to spend. From 2021 to 2022 that spending went up by 10%, Moynihan revealed, and began dropping to 9% in the first quarter of 2023.

Today, many Americans say their household expenses are outstripping their incomes, leading them to save less for their future. Researchers found that about 2 in 3 Americans say their household expenses have risen over the last year, but only about 1 in 4 say their income has increased in the same period.

The main question is what is going to happen to millions of Americans facing similar issues when the credit crisis chokes out numerous U.S. businesses and sparks widespread job losses? How will they afford basic necessities without a job and a line of credit? Who is going to help U.S. workers to get back on their feet? No matter where we look, the scenario seems completely devastating. The credit crisis will have far-reaching implications across our entire society, and unfortunately, the pain we felt so far is just the beginning.