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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowCredit card balances increased $46 billion in the second quarter, a 5.5% increase from the first quarter, and there was also an uptick in new credit card accounts. The 13% increase from the second quarter of 2021 to the second quarter of 2022 was the biggest such jump in more than 20 years.
“Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” researchers for the New York Fed said in a news release.
The numbers reflect the Bureau of Economic Analysis’s consumer spending report released last week, which showed that spending in June climbed 1.1%. Similar to the New York Fed’s findings, gas prices, which surged past $5 a gallon in many parts of the country in the second quarter, and inflation, which jumped 9.1%, year over year, in June, were likely the drivers of the increased debt.
A surge in new credit card accounts in the second quarter—233 million—marked record highs not seen since 2008, according to the report released Tuesday. But researchers for the New York Fed noted that delinquency rates for credit card debt is still relatively low. Despite a slight increase, it is still below pre-pandemic numbers.
The report released Tuesday found that household debt increased in the second quarter by $312 billion, or 2 percent, compared to the first quarter. Total balances are now $2 trillion higher than before the pandemic. Mortgage balances saw the highest increase, which is in line with a the central bank’s increased interest rates to cool down the blazing hot housing market.
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I wonder if our president is going to lobby for forgiveness of this credit card debt, knowing they were coerced into borrowing.
Doubt it and really doubt student loan forgiveness will happen on a larger scale. Talk about boosting inflation again.