Credit Card Debt Soars in America




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ORIGINAL POST

Posted by Ed 4 mths ago
Consumer debt – or euphemistically, consumer “credit” – jumped 4.9% in the third quarter compared to the third quarter last year, or by $182 billion, to almost, but no cigar, $4 trillion, or more precisely $3.93 trillion (not seasonally adjusted), according to the Federal Reserve this afternoon. As befits the stalwart American consumers, it was the highest ever.

Consumer debt includes credit-card debt, auto loans, and student loans, but does not include mortgage-related debt:

https://wolfstreet.com/wp-content/uploads/2018/11/US-consumer-credit-total-2018-Q3.png

The nearly $4 trillion in consumer debt is up 49% from the prior peak at the cusp of the Financial Crisis in Q2 2008 (not adjusted for inflation).

Over the same period, nominal GDP (not adjusted for inflation) is up 39% — thus continuing the time-honored trend of debt rising faster than nominal GDP.

But a hot economy is helping out: While over the past 12 months, consumer debt jumped by 4.9%, nominal GDP jumped by 5.5%. A similar phenomenon also occurred in Q2. This is rather rare. The last time nominal GDP outgrew consumer credit, and the only time since the Great Recession, was in the three quarters from Q1 through Q3 2015.

More https://wolfstreet.com/2018/11/07/the-state-of-the-american-debt-slaves-q3-2018/

COMMENTS

Ed 4 mths ago
Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks

So what’s going on here?

In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%).

The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9%

https://wolfstreet.com/2018/11/20/subprime-rises-credit-card-delinquencies-spike-past-financial-crisis-peak-at-smaller-banks/


https://wolfstreet.com/wp-content/uploads/2018/11/US-consumer-credit-card-delinquency-2018-Q3.png


The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.

The overall numbers give a falsely calming impression. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago.

https://wolfstreet.com/wp-content/uploads/2018/11/US-consumer-credit-cards-2018-Q3.png

Ed 4 mths ago
https://s3.amazonaws.com/media.eremedia.com/uploads/2017/03/canary-in-a-coal-mine.jpg


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