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Americans’ Credit Card Balances Just Plunged By A Record $76 Billion
Credit card balances for US households plunged by the most on record in the second quarter, The New York Fed said Thursday.
The data, from the latest Quarterly Report on Household Debt, underscores the dramatic impact of lockdowns and containment protocols on consumer spending. It may also suggest that Americans thought twice about effectively taking out high-interest loans during a period characterized by mass layoffs and extreme economic uncertainty.
Due to the pandemic and related social di
GDP plunged by some 30+% annualized. Aggregate income roughly flatlined with the unemployment benefits and other fiscal policies. Americans chose to save and/or pay down debt due to uncertainty about the future.
Not sure the numbers align very well, but the general story at least makes sense on the surface.
Pre-pandemic, we were over-stored, over-fed, and over-stimulated. Over the long run, this has to be a good thing.
Post pandemic, all those USD currently finding their way into US equities are creating an outsized demand.
USD from additional savings, from banks who have received cash from unprecedented pay down of cc debt, and from the hundreds of thousands of stock trading accounts opened up at Robinhood, etc. will no longer be chasing US equities. Instead, the cash will get spent in the economy.
True, earnings should go up. However, the demand for US equities (and the PE ratios) will drop like a stone.
Which equates to something like an average balance decrease of $400. Something tells me this is probably a precursor at best.
My credit card balance is negative, due to refunded flights and cancelled vacations.
Shocked. Why not just but purchases of Robin Hood stocks on the Visa? They take Visa and Mastercard, don’ they?