American consumers are more indebted than ever. The just recently released Federal Reserve Consumer Credit-G.19 report shows that U.S. consumer credit outstanding has reached historic levels; outstanding consumer credit is now at $4.7 trillion. In August, consumer credit increased at a seasonally adjusted annual rate of 8.3 percent. The previous rise in July had been 6.%.
These current levels of consumer debt show that the Federal Reserve raising rates has not slowed down consumer borrowing. While consumer credit declined in the years immediately after the 2007 – 2009 financial crisis, since the second quarter of 2011 until the second quarter of this year, consumer credit has increased by 90%.
In August, nonrevolving credit, which is largely comprised of auto, student, and personal loans, increased at an annual rate of 5.1 percent. This level is roughly unchanged from July.
Revolving credit, however, increased significantly at an annual rate of 18.1 percent; revolving credit includes credit cards, home equity lines of credit (HELOC), and personal and small business loans. While late payments and defaults, thus far seem to be under control, my concern is that with rising inflation, revolving credit could be a significant problem for American consumers, as their cost of borrowing increases. This problem will be compounded if unemployment rates start to increase.
Banks will be releasing earnings next week on October 14th. Banks are likely to report weaker earnings due to market volatility and a slow down in investment banking transactions. In the earnings releases, what is important to watch for is the asset quality in banks’ balance sheets. Take a look to see if non-performing loans (NPLs) are rising and the level calculated for loan loss reserves. This data will give the market an indication of whether such a high level of consumer indebtedness should worry us.
Source: Fox Business
Foreign students to reportedly be barred from UK unless studying at top universities
China fights the biggest corona wave
What to know about the pause on student debt relief
Joe Amabile Teams up With Amazon To Support Small Business Saturday
College Football Week 13 preview: Everything on the line as Michigan visits Ohio State
“Not the homosexual is perverted”: filmmaker Rosa von Praunheim turns 80
2023 Toyota Prius: See The Changes Side By Side
What Does Mastodon Mean for ‘Climate Twitter’?
New NASA Satellite Will Keep Tabs on Nearly All of Earth’s Water
A ’90s Workout Playlist That’s Gonna Make You Sweat… and Sweat Some More
‘Below Deck Med’: Kyle Says LGBTQ Yachties Still Face Discrimination – ‘Where’s the Equal Opportunity?’ [Exclusive]
‘Strong Signals’ From King Charles Hinted at Excitement to See Kate Middleton During State Visit
Why Micky Dolenz Performs The Monkees’ ‘(I’m Not Your) Steppin’ Stone’ at Every Concert
‘Gilmore Girls’: Inside the Secret Societies the Life and Death Brigade Is Likely Based On
AI named Cicero just beat humans at Diplomacy
Lifestyle21 hours ago
Full Feast! Inside the Kardashian Family's Festive Thanksgiving 2022
Lifestyle13 hours ago
Lala! Meghan! Celebrities Who Revealed They Did Background Checks on Dates
Auto20 hours ago
Best Spy Shots For The Week Of November 21
News21 hours ago
‘Wednesday’ Creator Reveals 3 Addams Family Easter Eggs
Auto19 hours ago
Record Market Share For EVs In The USA And Europe
Finance13 hours ago
Former Disney CEO Bob Iger Is Back Again And Shareholders Are Loving It
News21 hours ago
Amid persistent inflation, cash-strapped consumers are tipping less
News7 hours ago
Jordan Peterson’s Politics Make Life Harder for Young Men