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

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6 thoughts on “Americans’ Credit Card Balances Just Plunged By A Record $76 Billion

  1. 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.

  2. 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.

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