Americans Have Some Credit Card Debt
What do you get when you combine soaring credit card balances with rapidly rising rates?
Nothing good, probably. We're about to find out.
The latest installment of the NY Fed's quarterly household debt report, released on Tuesday, showed that credit card debt rose $38 billion in Q3 (figure below), the fourth-most ever, behind Q2, Q4 of 2021 and Q4 of 2019, on the eve of the pandemic.
The headline-friendly version says credit card balances rose the most in two decades, which is true when you
There’s another debt bomb coming due that I haven’t seen anyone talking about: student loans. Nearly $2 trillion in student loans have been in a repayment moratorium for over 2 and a half years. That all comes to an end January 1. People with the highest marginal propensity to consume haven’t had to make a loan payment for nearly 3 years. (And I have to imagine there’s a big overlap with the people racking up credit card debt). All that comes crashing to a halt in a month and a half. Q1 is going to see a consumption collapse.
In other news, Biden’s student loan forgiveness has been struck down by the courts, and it appears unlikely to be resurrected on appeal.
There are a lot of headwinds to consumer spending next year once extra pandemic savings get depleted
RIA how will we know when pandemic savings get depleted? I mean are we talking about the relatively tiny stimulus handouts? If people “consumers” are living pay check to pay check, that part of pandemic savings was spent several dozen pay checks ago.
Look at the checkable deposits chart. Last I looked q3 isn’t out yet.
Thank you!
That is a dramatic rise, it seems the bottom levels of the 1-50 really are at a pay check to pay check or below level for this data to show such an increase.
The poorest money is probably gone, the thrifty of the bottom 1-50 only lose through budget attrition, the upper levels have not wanted to or have not had to spend it. Will follow this.