RECORD-BREAKING: Credit Card Balances Reach North of $1 Trillion in Debt
According to the Fed’s most recent Household Debt and Credit report, aggregate household debt balances grew by $16 billion in the second quarter of 2023. Balances currently stand at $17.06 trillion and have grown by $2.9 trillion since the conclusion of 2019, right before the Wuhan virus induced a worldwide recession.
Credit card balances grew by $45 billion, which represented a 4.6% quarterly increase, and hovered around $1.03 trillion, a record high. Credit card accounts grew significantly from 5.48 million to 578.35 million, which is about 2 credit cards per every adult. Similarly, aggregate credit card account limits grew by $9 billion and currently stand at $4.6 trillion.
Auto loan balances climbed upward by $20 billion, continuing an upward trend that has been in effect since 2011.
Other balances, such as retail cards and other consumer loans, grew by $15 billion.
In sum, non-housing balances increased by $45 billion.
The New York Fed also published an accompanying Liberty Street Economics blog analyzing trends in credit card lending and repayment. Aggregate limits on credit cards grew by $90 billion in the second quarter, which marked a 2.0% increase from the prior quarter.
According to this report, credit card balances climbed upward by $9 billion and now hover around $4.6 trillion.
According to the Fed’s research, “credit card balances saw the most pronounced worsening in performance in Q2 after a period of extraordinarily low delinquency rates during the pandemic, in large part due to the student loan repayment moratorium.”
When it came to bankruptcy, roughly 114,000 had bankruptcy notations featured on their credit reports in Q2 2023, which was a slight increase from Q1.
Overall, Americans are racking up alarming amounts of debt. This is the norm of the American political economy which is marked by massive debt accumulation both in the private and public sectors. Generally speaking, real political and economic change starts at the household level. When profligate spending is normalized at the private level, it follows that the government will emulate said profligacy.
Nevertheless, the country needs a two-pronged approach of fighting reckless government and consumer spending. This country needs to learn the value of saving and investing. These are the mechanisms of wealth building that makes us both prosperous in the present and prosperous in the future so that our posterity grows up in a stable economic environment.