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Credit Card Debt Hits Record High Again, According to New York Fed Data

Americans' credit card debt reached a new record high of $1.17 trillion in the third quarter, according to a report from the New York Federal Reserve. This marks a $24 billion increase from the previous quarter and is the highest level recorded since the Fed began tracking the data in 2003. Overall household debt also climbed to a new peak of $17.94 trillion, with mortgage, auto, and student loan balances all increasing as well.

Despite rising income levels, elevated delinquency rates highlight ongoing financial stress for many households, with credit card delinquencies easing slightly to 8.8% from 9.1% in the previous quarter. However, delinquencies for auto loans and mortgages worsened slightly. Fed researchers expressed concern over increasing delinquencies, especially among younger borrowers, attributing the rise in debt payments to inflation and higher interest rates. Read More.

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Is This the Calm Before the Second Wave?

The report highlights that the U.S. Consumer Price Index (CPI) rose by 0.2% month-over-month in October, aligning with expectations, while the year-over-year inflation rate increased to 2.6% from September's 2.4%. Core CPI also grew 0.3% month-over-month, remaining steady from September, and saw a 3.3% year-over-year increase. Inflation pressures continue, especially within core services and housing-related costs, suggesting inflation is not fully subdued.

Analysts emphasize that factors such as tariffs and restrictive economic policies could exacerbate inflation risks in 2025, with persistent inflation in services and property-related sectors. Concerns about sustained high inflation are compounded by rising tariffs, tighter immigration, and potential geopolitical tensions. The report suggests that inflation control remains challenging, with core and super-core CPI indicating ongoing pressure.

Investors are advised to brace for potential stagflation and consider diversifying into assets like gold, which historically perform well in inflationary environments. The report critiques the Federal Reserve's strategies and emphasizes the challenges of achieving a 2% inflation target, suggesting that inflation will remain a critical economic issue moving forward. Read More.