Most official data continues to show that the US economy is humming, with unemployment rates historically low and inflation expectations still remain relatively stable.
But under the hood, wealth disparities suddenly grew, which had subsided in the early stages of the pandemic era. The top tier of the American income distribution – people who earn around $153,000 in annual income now have a lot of electricity. of spending that drives our growth.
Meanwhile, Americans who are not at the top are facing an increasing financial difficulties.
The result is that if prices of most valued assets such as stocks, houses, and cryptocurrencies deteriorate, the US economy could be exposed to a more sharp slump.
“The fact that consumer spending is highly concentrated amongst the wealthy people makes the economy vulnerable,” says Mark Zandy, chief economist for Moody’s analysis.
Many low-income households (less than $73,000) are likely to still have jobs, and their wages are on a broader average, primarily inflation-related. However, most people are unlikely to own the kind of property they have appreciated in recent years, Zandi said.
“For the middle class and the low class, it was a struggle,” Zandi said.
Instead, they said they used their credit cards to maintain their purchase power.
However, the annual rate for these cards is not yet below 20%.
“That’s hard to digest financially,” Zandi said. “So they have to keep making some pretty tough choices.”
As a result, data issued by the Federal Reserve Bank of New York shows that the overall percentage of consumer debt in delinquency is currently at its highest level in nearly five years. Meanwhile, the share of credit card accounts showing late arrears for at least 90 days has been the highest share since 2011, rising to over 11%, a higher percentage than any time in the pandemic and post-pandemic era. , and the data shows.
This is the same with regard to the sharing of newly arrears credit cards. This is around 9% of the highs that have not been seen since 2011.
According to data from the Kansas City Federal Reserve, the share of active credit card accounts that only make minimum payments has now reached a 12-year high.
Revenue divisions have always been present in the US economy, but up until the pandemic, the pace of spending growth was largely consistent in all wealth brackets.
But about three years ago, according to the 2024 Federal Reserve Report, the growth in spending among high-income households began to accelerate. This trend continues this year, but is beginning to be a little late. Anecdotes, even households over $100,000 are increasingly changing to options like Walmart to meet their spending needs, even at levels once considered privileged.
Still, the wealthiest US consumers continue to separate. The latest data from the FICO Credit Reporting Group shows that individuals with credit scores above 750 were at record highs, and shares began with scores below 600 after years of decline , creeps up.
“I missed my payment with my bank card…it’s now higher than it was before the pandemic,” wrote Arkali, senior director of FICO scores and predictive analytics, last fall. “In the face of ongoing economic uncertainty, rising interest rates and rising consumer prices, people continue to rely heavily on credit cards for their daily expenses, which is especially struggling financially. You can compare and consider people who are, and credit card usage is high, leading to defaults in subsequent credit card payments.”
Non-prime borrowers, currently numbered millions, are facing certain distress.
“In this segment of the credit group, both default and debt levels of payments have increased at a higher percentage than observed trends in the total population of FICO scores, and are now above pre-pandemic levels.” Alkali writes.
Despite the concerning tendencies, there are no signs of an imminent crisis.
“I think I have a cautious optimism,” said David Sojka, senior adviser at Equifax, who said that delinquency has actually slowed down. “Consumers are smarter about spending and utilization. They control their spending compared to their own measures.”
However, the trend is clear.
“Credit card performance shows signs of consumer stress,” the Philadelphia Federal Reserve economist wrote last month, “Consumers spend more and lead to higher balances, but also fewer. Increase the amount of rotation and increase the amount of rotation.”
This story originally appeared on nbcnews.com. Read more from NBC News:
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