<![CDATA[How stretched is the American consumer?]]>

The American consumer's financial resilience is being tested by persistent inflation and rising interest rates, according to a report by the Federal Reserve Bank of New York released on May 13, 2024. The report indicates that household debt increased by $149 billion to a record $17.7 trillion in the first quarter of 2024, driven primarily by a $111 billion rise in mortgage balances. Credit card debt also saw a significant increase of $50 billion, reaching $1.13 trillion, while auto loan balances grew by $17 billion to $1.62 trillion. Despite these increases, overall delinquency rates remained historically low, with only 3.1% of total household debt in serious delinquency (90 days or more past due) as of March 31, 2024. However, the report highlights a concerning trend in credit card delinquencies, which rose to 7.1% for this category, the highest level since 2011. This uptick suggests that consumers are increasingly relying on credit cards to manage expenses amidst ongoing economic pressures. The Federal Reserve Bank of New York's analysis, based on data from the U.S. Census Bureau and the Bureau of Labor Statistics, also noted a slight increase in student loan delinquencies, which reached 4.9% in the first quarter of 2024. The cumulative effect of these financial strains could impact consumer spending, a key driver of the U.S. economy, in the coming months.