Americans are holding more household debt than ever before as one of the biggest banks in the country warns of a weakening US consumer.
According to a report from the New York Fed, US credit card debt just hit a record $1.14 trillion.
On the whole, Americans have more student loan, mortgage, credit card and home equity revolving debt right now than at any time in history.
Says the Fed,
“Aggregate household debt balances increased by $109 billion in the second quarter of 2024, a 0.6% rise from 2024Q1. Balances now stand at $17.80 trillion and have increased by $3.7 trillion since the end of 2019, just before the pandemic recession.”
The Fed also reports that delinquency transition rates for credit cards, auto loans, and mortgages increased slightly in the second quarter, and that about 4.9% of consumers had a third-party collection account on their credit.
Consumers also appear to be experiencing a slow-down amid the higher debt loads.
In a new interview with FOX Business, Bank of America CEO John Moynihan says that the bank’s consumer base is currently spending at half the rate they were last year, a sign of a “depleting” consumer.
“Well, in our consumer base of 60 million customers spending every week, what you’re seeing is they’re spending at a rate of growth of this year over last year, for July and August so far, about 3%. That is half the rate it was last year at this time. And so the consumer has slowed down. They have money in their accounts, but they’re depleting a little bit. They’re employed, they’re earning money, but if you look at- they’ve really slowed down.
So the Fed is in a position they have to be careful that they don’t slow down too much. Right now, where they are spending at is consistent where they spent in ’17, ’18,’19, a lower inflation, a more normal growth economy.”
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