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Did Americans Just Put Away The Credit Cards?
Is the incorrigible American spendthrift finally exhausted?
I don't know how many times I've posed that question over the past three years. A lot. And every time, the answer ends up being "no."
Betting against the US consumer is perhaps the quintessential macro fool's errand. Americans find a way to spend even when there's no more money.
That said, delinquencies of various sorts are on the rise. And the nation's collective credit card balance exceeds $1 trillion at a time when card rates are
I make a good income and I have cut my spending. Not because I can’t afford things, but because at current prices, nothing has value. I am balding and buzz my head. I went to a barbershop the other day and they wanted $50 to run a pair of clippers over my head for 10 minutes. No thanks. The last time I had Starbucks a medium latte was $6. No thanks. My answer to most decisions regarding money is now “no thanks” and it will continue to be so until the value proposition changes.
On a related note:
https://www.bloomberg.com/news/articles/2024-05-07/-buy-now-pay-later-has-americans-racking-up-phantom-debt?cmpid=BBD050824_OUS&utm_medium=email&utm_source=newsletter&utm_term=240508&utm_campaign=openamericas&sref=FxVxvswS
Thinking alike here 🙂
It would be interesting to have data for BNPL. I think (see below) adding BNPL activity to the CC chart would at least move the needle.
AFRM’s GMV grew +30% to $20BN in 2023. 1Q24 GMV grew +36% to $6.3BN, so usage is accelerating. Average transaction is about $300. Klarna is the largest BNPL with 2023 GMV about $90BN, so guessing 1Q24 around $25BN? SQ (Afterpay)’s 1Q24 GMV was $7.0BN (+25%). AAPL (ApplePayLater) just launched. I don’t have numbers for EBAY’s BNPL or other BNPLs. Might be an annual run rate of $150-200BN of GMV on BNPLs right now, growing say +20% to +25%? Would have to estimate the credit balance from that.
Thanks for the spadework, JL. Funding the American dream.
Then we see mention of the next step being the securitization of residential LOCs.