The U.S. economy as a whole appears healthy, but after more than two years of inflation problems, some Americans have run out of savings and their credit card balances have climbed. These are predominantly low- and moderate-income renters who are racking up debt and may be at risk of further deterioration in their financial situation in the coming year, especially those who have recently restarted paying their student loans.
According to the Federal Deposit Insurance Corporation, as of the third quarter of 2023, Americans had more than 1$05 trillion, a record, and that number will certainly continue to grow after the release of Q4 data. Credit card default and conversion rates, the percentage of loans that banks believe will never be able to repay, are now higher than they were in 2019 and are expected to continue to rise, according to the latest report from credit rating firm Moody's. These worrying indicators are related to the average interest rate on bank credit cards of around 215 Consistent, this is the highest level since the Fed began tracking data in 1994.
Most analyses of Americans' finances tend to paint a picture of two types of consumers. On the one hand, about two-thirds of Americans own their homes, invest**, earn fairly good yields, and have enough savings to cope with high inflation. Their home overdue rates remain near record lows and home prices continue to be high**. But for other Americans, the situation is getting difficult. Those groups, mainly low- and middle-income tenants who have not benefited from the increase in house prices and share prices, are feeling financial stress, which is causing their overdue payment levels to rise. They have been hit hard by inflation.
Inflation in the United States reached 91 peaks and is currently just above 3. But the cost of many goods and services remains high. According to the Bureau of Labor Statistics, the ** for a loaf of bread in December 2020 was 1$54, which rose to $2 at the end of last year$02, while the average for a gallon of gas** is from $2$17 rose to $3$29. Renters are feeling the pressure in particular. According to RealtorThe median rent for properties with up to two bedrooms rose to $1,713 at the end of last year from $1,424 at the end of 2020, according to com.
One way to gauge the divergence of the U.S. economy is to look at the performance of some of the major credit card companies. The clients of Capital One, Discover Financial, and Synchrony are typically people with poor credit histories, while American Express typically serves the most affluent and affluent. As the largest retail co-branded credit card issuer, Synchrony Bank has a convertible ratio of 35 to 56％。At the same time, there are about 47 of Synchrony customers are 30 days or more past due, which is also an increase from a year ago. Discover's customer credit card balances were $102 billion, up 13 percent from a year ago. At the same time, the rate of debt conversions and the rate of 30-day overdue payments have risen. American Express also saw an increase in its convertible rate and overdue payment levels last year, but not as much as its rivals. Historically, American Express has been serving customers with high credit histories who repay their credit cards at the end of each month. But even American Express customers now carry balances more often. American Express's net conversion ratio was 2 last quarter, up from 1 a year ago2 Rise. In the middle of the polarized U.S. economy, there are two large banks like JPMorgan Chase and Bank of America with a large number of customers. Since these banks' customers cover a wide range of income levels and credit histories, their credit indicators have risen only slightly. But because of these banks' credit card portfolios, they have all been increasing the amount of money available to cover potential losses.
Americans are unlikely to see any relief from banks or interest rates so that they can turn these high-interest debts on their backs. The Fed has said that the first rate cut may be months away. In addition, credit card interest rates tend to be very high compared to loans offered by the Federal Reserve. In addition, reports on banking sentiment show that banks have become more conservative in lending money, meaning these Americans are less likely to convert their high credit card bills to loans with lower interest rates.
Economists believe that the financial stress felt by these low-income Americans is unlikely to spread to the economy on a large scale at this time. But economists and experts believe these rising payment delays are one of the growing risks facing the economy this year, especially if student loans become an unbearable burden for young, indebted Americans. Consumers' finances could play an important role in the 2024 election. Joe Biden has in part campaigned on efforts to reduce costs for American families. Republicans countered that Biden was first and foremost responsible for the high costs.