Credit card debt has surpassed $1 trillion Mark in the USA, with consumers averaging over $5,900 in credit card debt - A 10-year high. Second-quarter credit card balances saw “the most pronounced worsening in performance” compared to other categories, such as housing and student loan debt, the New York Fed said. Total consumer borrowing is setting records monthly and is now just below $5 trillion, even with credit card usage dropping. A vibrant labor market has supported consumer spending this year, but economist are keeping a close eye and watching carefully as excess savings from the pandemic has been crushed by higher interest rates and higher prices.
New credit card delinquencies have surpassed pre-pandemic levels, and auto loan delinquencies were at 7.3% in the second quarter which is also higher than pre-pandemic levels. As millions of Americans will soon have to start paying back their student loans again, delinquency rates may increase. The number of Americans borrowing from their 401K or depleting their savings accounts is also on the rise. Mortgage delinquencies have remained very low so far.
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