As high inflation forces Americans to spend more on gas and bills, young and low-income consumers are starting to feel financial pressure.
For months, things have been looking good for US consumers, their bank accounts padded by government stimulus, student loan forbearance and pandemic-era savings. Bank executives have consistently said consumers have healthy financial cushions and are spending money despite high inflation and the slowing economy.
Data out on Thursday showed US consumer spending grew at its slowest pace in two years, as the economy unexpectedly contracted in the second quarter. Among non-prime borrowers, the percentage of credit card and car loans that were more than 30 days past due also rose, VantageScore found. Credit card delinquency rates are now back to their prepandemic levels for young people and non-prime borrowers, the data showed.
TransUnion, one of the big three consumer credit ratings agencies, estimates credit card delinquency rates could rise to 8.4% in the first quarter of 2023, up from 8% in the first quarter this year, if inflation remains high.The average debt held by a non-prime customer was $22,988 in the first quarter of 2022, excluding mortgages, according to TransUnion. That is up from $22,461 a year earlier, and $22,970 in the first quarter of 2020, before the pandemic began in the US.
Customers who become 90-days delinquent are more frequently paying off their loan in full, said the executive, who asked not to be named discussing non-public information. That indicates borrowers are taking advantage of high car values to sell their car, rather than see it get repossessed.Spending less
They must go seek asylum in the China.
Dilligaf. They should live in this country.