The events drew parallels to the 2008 financial crisis and are likely to cause banks to tighten up their lending, putting added pressure on already strained consumers, which could in turn cause them to pull back on spending and trigger layoffs at companies facing declining sales.
Goldman Sachs on Thursday increased its odds of a recession by 10 percentage points, to 35%. Other economists are even less optimistic the U.S. will be able to avoid an economic downturn, with thoseOver much of the past year, as inflation has hit its highest levels in decades, consumers have largely been able to keep increasing their spending. While retail sales declined slightly in February compared to January, there were still up 5.
“The average person’s finances were probably better a year or two ago than they are now just because they were more flush with cash and had less debt,” said Ted Rossman, a senior industry analyst at Bankrate.com. “There was a time in early '21 that credit card balances were 17% lower than they were prior to the pandemic. And now they’re up 28% from that low point.”
The percentage of credit card holders carrying debt from month to month has increased to 46%, up from 39% a year ago, according to Bankrate. Auto loan delinquencies have been steadily rising from their pandemic lows with the share of auto loans at least 60 days overdue at its highest level since 2006, according to aAll those factors have investors, economists and corporate executives closely watching what moves the Federal Reserve will make on interest rates next week.