Between July and September, US household debt hit a new record high of $ 15.24 trillion, the New York Federal Reserve said on Tuesday.
This is an increase of 1.9%, or $ 286 billion, from the second quarter of the year.
Now that the sugar rush has worn off, consumers are reverting to their old ways of spending with their credit cards. Credit card balances increased $ 17 billion, similar to the second quarter. But they are still $ 123 billion lower than at the end of 2019 before the start of the pandemic.
Auto and student loan balances also increased, increasing by $ 28 billion and $ 14 billion, respectively.
Even though credit card debt has yet to regain its pre-pandemic level, total debt is already $ 1.1 trillion higher than at the end of 2019.
High spending boosted by even higher inflation
Americans are spending big right now. The explanation of economists is, for the most part, “because they can”.
With the labor market picking up speed and labor shortages driving wages up, people’s wallets fill up before the holidays.
This is a good thing, because everything is getting more expensive.
Inflation is reaching multi-year highs thanks to supply chain disruptions that have increased shipping and raw material costs. At the same time, consumer demand is also skyrocketing.
Firms can only absorb part of the price increase before passing the higher costs on to end consumers.
Excluding energy and food prices, as well as commercial services, the producer price index rose 0.4% seasonally adjusted last month, or 6.2% over the 12-month period.
The price index that tracks intermediate demand – that is, goods and services sold to businesses – for processed products jumped 2.1%, its biggest gain since May, mainly due to the increase energy costs.
During the 12-month period ended in October, the index climbed 25.4%, the largest increase since January 1975.
Consumer price inflation, which tracks prices paid for food, shelter and the like in October, is expected Wednesday morning.