Student Loan Zerohedge – While markets are still focused on tomorrow’s CPI release and to a lesser extent, the April Retail Sales Report, both of which will be released at 8:30 a.m. May 15th. We should bring up another important report that doesn’t usually get much attention: The New York Fed Debt and Household Credit Report for 1Q 2024, which was just released, with the latest data on credit card debt and recent default is the most important part of the report.
While we already know that in the latest monthly consumer credit report released by the Fed last week and covering March, total consumer debt hit a peak (despite a sharp decline in credit card growth) although personal savings rates have declined. All time low, almost no health support for US customers…
Student Loan Zerohedge
… Today’s report provides more details, which do not change the conclusion: American consumers are weaker and, although not yet in crisis, they will be there soon.
10 Economic Signals Practically Screaming A Recession Is Ahead
As the New York Fed chart shows at the end of the first quarter, the United States this. Household debt was at a record high and more borrowers were struggling to make ends meet: the United States. here). This is an increase of $ 184 billion, or 1.1% from the fourth quarter.
Consumers have added $3.4 trillion in debt since the pandemic, and the mounting debt has driven interest rates much higher.
And with credit card and total credit rates at record highs, the data underscores the growing financial pressures on American households in an era of rising inflation. The continued rise in the prices of basic goods such as food and rent has put a strain on household budgets, forcing people to borrow on their credit cards to pay for necessities.
Total credit card debt was $1.12 trillion in the first quarter of 2024, according to the report (a different amount from the monthly publication reported last week by the New York Fed and higher lenders). Credit card payments. While gradually declining, according to this data set (if not the other NY Fed data sets), the number is in line with the seasonal pattern of debt repayment of -consumer that occurs on holidays. But as Bloomberg notes, credit card balances grew by nearly 25% compared to the first quarter of 2020.
⚠️ Jpmorgan Chase Securitizing Arm Loans For $523.52 Million Mortgage-backed Securities Deal
“Credit card balances typically increase in the second and third quarters, and they really tend to increase around the holidays in Q4.”
Ted Rossman, senior analyst at Bankrate, wrote in a note to clients. “With inflation and interest rates likely to remain high, there is a good chance that credit card balances will reach a new high later in 2024.”
Meanwhile, in a blog post by NY Fed economists, they warned that “consumers facing financial stress may have their credit cards canceled and fall behind on payments” One of -observable factors strongly associated with future delays is the high level of credit card use. “
Joelle Scally, regional economic director for family research and public policy at the New York Fed, said: “In the first quarter of 2024, the exchange rate of credit and car loans for severe delays continued to increase. “Increasing numbers of borrowers failed to pay with a credit card, indicating a worsening financial situation among some families.”
Inside Job Terms
As of March, 3.2% of the remaining debt was in the form of some debt. This is still 1.5% less than the fourth quarter of 2019, but the reduction in exchange rates increased for all product categories, according to the Fed. And the interest rate before covid is also less than 5%.
In a separate post, economists in St. The Lewis Fed indicated that credit card deferment rates have returned to historic levels after government programs related to a government outbreak pushed them abnormally low. However, they added that “the current level of credit card delays is greater than the pre-epidemic level, which indicates that the trend that started before the epidemic is accelerating.”
About 121,000 consumers had bankruptcy notices added to their credit report last three months, and about 4.8% of consumers owed some debt to third-party collections. What is remarkable is that the users who are collecting the highest number of records in a number of collections. This means that when the dictator’s last train leaves the station and creditors start collecting revenue, the amount of debt in third party collection will leave the current table!
And the clearest hint we get is that borrowers who use more than 60% of their credit are declining at a slower pace than ever before. About a third of the balances associated with borrowers who consumed more than 90% of their credit were late last year, compared to about 25% before the outbreak.
Today’s Students [infographic]
The most notable thing is that although the student loan repayment moratorium has been ended, it seems that no one is paying back their student loans, but lenders are not worried about making bad debts such as these (.
Then, it is difficult to determine how much of the debt owed due to the failure of federal student loan payments will not be reported to the credit bureaus until the fourth quarter).
The data also shows a wide range of credit card usage rates. About one in six credit card users use at least 90% of their existing credit. And another 11% use between 60% and 90% of the available credit.
Fed researchers found that younger, lower-income borrowers are more susceptible to financial stress than older, higher-income borrowers who may have more credit. “Millennials are the only group making mistakes beyond their pre-epidemic rate,” New York Fed researchers wrote in a blog post.
Student Loan Repayments Could Help Jumpstart The Recession
The Fed’s report showed that 6.9% of credit card debt turned into serious default last three months, from 4.6% a year earlier. And for credit card holders between 18 and 29, 9.9% of the balance is in serious delinquency.
The decline in auto loans is also high because the average monthly car payment has increased to $738 in 2023. Almost 2.8% of car loans are now 90 days or later, equivalent to more than 3 million cars. Auto loans are the second largest type of debt after $1.62 trillion in unpaid home loan debt.
The biggest holders of household debt are for housing. It accounts for more than 70% of the total. Debt works well, but homeowners are increasing their home equity extraction in the form of mortgages, as new mortgage sources fall to near-zero as a result of the increase in rates…
Meanwhile, on the other side of the table, an additional $16 billion in mortgages were created, the largest increase since 2008 and $37 billion added last year. Homeowners have about $580 billion in home equity loans, the most available in about 15 years.
In June 2016, Trump Tweeted Nine Charts Criticizing Obama. Let’s See How He Stacks Up.
So what to make of this information, especially when even the Fed is warning that the United States this. Consumers are in a vulnerable position.
Also, credit card debt has risen sharply in recent quarters. When it exceeded $ 1.0 t for the first time in history in 2Q 2023, the alarm went off in some circles, although according to Bank of America economists (especially Sanguine), the increase in paper debt of credit was partly due to one of the normalization After the user is consumed. Their financial incentive to pay their balance in 2020-21. In addition, they note that even the introduction of structures that move away from credit card debt should be added to the secondary economy. As a share of disposable income, total credit card debt in 4Q 2023 remains below its pre-epidemic level.
Instead of total loans, BOFA encourages customers to pay more attention to credit card losses: the total amount of bad credit card debt was $110 billion in the fourth quarter of 2023, an increase of 42%. This number is higher than Q1 2024.
Be sure to read our “How to [Read/Help] Zero Protection Without Attracting [HR/Treasury/Black Helicopter]”
Daily Chartbook #268
It would be wise for you to study our privacy policy and our (non)disclosure/full disclosure policy. This is our cookie policy. After months of dramatic changes in American student loans not only failed to approve the approval agreement of $ 9.5 billion, but also the reduction was significant in the last months, when the increase of each month was in the chain $ 20 / $ 30BN.
Starting with the previous one in September, credit card debt rose to just $3.1 billion, with the exception of the terrible printing of negative credit rolls in June, the smallest increase in -one month since the Covid crisis.
It is