For all the talk about the strength of the U.S. economy in the lead-up to the Nov. 5 election, household finances are strained for many Americans after years of inflation and high interest rates. A surge in credit-card debt is just one sign of that financial pain.
Total credit-card debt climbed to US$1.17-trillion in the third quarter, rising by US$24-billion from the previous quarter, according to a new report from the Federal Reserve Bank of New York. That’s a record high, and it comes as other types of consumer debt, such as auto loans and home equity lines of credit, also jumped higher.
While the report showed that aggregate income growth in the U.S. grew faster than overall debt, 8.8 per cent of credit-card balances were in delinquency, meaning payments were 30-plus days past due, a slightly lower delinquency rate than in the second quarter but one that remains near a 13-year high.
“Elevated delinquency rates reveal stress for many households, even amid some moderation in delinquency trends this quarter,” said Donghoon Lee, an economic research adviser at the New York Fed.
Ahead of the election, which returned Donald Trump to the White House and delivered the House of Representatives and Senate to theRepublicans, American voters listed the economy as their primary concern, even though the U.S. is leading G7 economies in growth.
To the extent that rising consumer debt levels expose the disconnect between rosy economic portraits and strain at the household level, the situation in Canada bears watching. A surge in credit-card debt is playing out in much the same way – except in Canada economic growth and the job market have already stalled.
Decoder is a weekly feature that unpacks an important economic chart.
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Publish date : 2024-11-14 03:19:00
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