Americans Are Straddling a Record $1 Trillion in Credit Card Debt Thanks to Big-Government-Driven Inflation
The economy notched a new record last month–and it’s not a good one. For the first time, Americans’ credit card debt levels surpassed $1 trillion.
According to new data released by the Federal Reserve Bank of New York this week, credit card balances rose 4.6% (or $45 billion) to hit a series high of $1.03 trillion in Q2 2023. Americans opened 5.48 million new accounts this quarter and limits grew by $9 billion to $4.6 trillion.
Auto loan balances rose by $20 billion, and combined with credit card balances, were major drivers of total household debt rising marginally by $16 billion (0.1%) to over $17 trillion.
Delinquency rates are an area of concern. While they were roughly flat in Q2 and remained low, previously they had been declining sharply since the beginning of the pandemic. Increasingly, credit card and auto loan debt moving into delinquency is rising (by 0.7 and 0.4 percentage points, respectively).
Household financial health is concerning overall but worrisome for some more than others. Because inflation remains 16% higher than in January 2021, households effectively received a pay cut as my colleague Carrie Sheffield explained recently. “There’s only so much hard debt that people can handle before delinquencies really spike,” Matt Schulz, chief credit analyst at LendingTree said.
At the root of our economic woes, we find government. [keep reading]
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