NEW YORK—Suggesting tougher financial times may be ahead, a new analysis by the New York Fed is pointing out consumers failed to pay down their debt in the first quarter of 2023.
Credit-card balances hit $986 billion in the fourth quarter last year and remained largely unchanged in the first quarter of this year, the Federal Reserve Bank of New York said in its most recent quarterly report on household debt.
“It looks increasingly likely that credit-card debt is on track to hit the $1 trillion mark this year, and experts say that this number could be an indicator of a looming economic downturn,” MarketWatch reported. “This has raised eyebrows among some observers, because people typically pay off their debts from the holiday season in the first quarter of the year. That did not happen this year. This was the first time credit-card debt did not make its customary dip between the fourth and first quarters since the end of 2000 and the beginning of 2001, New York Fed researchers said.
“Although inflation is slowing and wages are starting to rise, inflation is still squeezing people’s budgets,” said Mary Eschelbach Hansen, a professor of economics at the American University in Washington, D.C., and author of “Bankrupt in America: A History of Debtors, Their Creditors, and the Law in the Twentieth Century.”
Not the Result of ‘Splurges’
MarketWatch noted that Hansen said she doubts that the biggest problem is people splurging on gifts over the holidays or post-pandemic “revenge travel” that they are now unable to pay off.
“It seems likely that part of the fourth-quarter run-up in balances went towards groceries and other everyday bills rather than holiday expenditures, and folks are having a harder time paying that back,” she said.
Feeling the FOMO Fever? CUToday.info Has a Prescription
Are you missing out on the latest news in credit unions? Missing the trends and developments you need to be aware of? We can help. Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
And it’s free!
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.