Lee Munson, president and chief information officer (CIO) of Portfolio Wealth Advisors, talked about the expected earnings releases of major banks, the Federal Reserve’s interest rate cuts, and gave his outlook for the market this year.
More Americans are falling behind on their monthly appointments. Payment by credit cardand according to new data released by the Federal Reserve Bank of New York, student loan repayments may be to blame.
Credit card delinquencies declined in the early days of the pandemic as the government sent trillions of dollars in stimulus checks to American households and businesses. However, as a result of high inflation and interest rates, delinquent amounts have steadily increased, making it difficult for Americans to pay off their credit card balances each month.
As of December, about 3.1% of credit card debt balances were in some stage of delinquency, up from 3% in the previous quarter but still lower than the 4.7% average before 2019. COVID-19 pandemic The findings from the New York Fed show have begun.
“Delinquencies on credit cards and auto loans remain above pre-pandemic levels,” said Wilbert van der Klaau, an economic research adviser at the New York Fed. “This indicates increased financial stress, especially among young people and low-income households.”
The number of well-paying jobs is decreasing
In this photo illustration, a credit card is used to pay for gas on February 7, 2024 in San Anselmo, California. (Photo illustration: Justin Sullivan/Getty Images/Getty Images)
Credit card delinquencies continued to rise from their pandemic-era lows in the fourth quarter. About 8.5% of credit card debt fell into delinquency in the three months from October to December, compared with 8.01% in the third quarter and 5.87% a year ago.
This increase was most pronounced among those aged 30 to 39.
“This is probably not a flashing red light, but rather signals a slight weakening of household balance sheets, consistent with a slowdown in spending and a slight contraction in consumer spending into 2024,” the New York Fed said. said. researchers told reporters during the call.
There are likely several reasons why delinquency is increasing among American youth.
This increase is student loan payments Alternatively, it could indicate that this age group overextended themselves financially while receiving stimulus payments during the pandemic.
More Americans looking to re-enter the workforce to offset the blow of high inflation
Visa Inc. credit and debit cards are arranged for a photo shoot in Washington, DC on Monday, April 22, 2019. (Photographer: Andrew Haller/Bloomberg via Getty Images/Getty Images)
“We believe that the resumption of student loan payments is placing some strain on this population,” the researchers said.
Federal student loan payments resumed in early October. president biden He refused to extend the pandemic-era pause that first began in March 2020 under his predecessor, former President Donald Trump. Payments did not officially resume until October, but interest began accruing again from September 1st.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| Ma | Mastercard Co., Ltd. | 458.26 | -3.65 | -0.79% |
| V | Visa Co., Ltd. | 275.78 | -3.09 | -1.11% |
| J.P.M. | JPMorgan Chase & Co. | 174.81 | -0.58 | -0.33% |
| C | Citigroup Inc. | 54.29 | -0.25 | -0.46% |
| BAC | bank of america corporation | 33.12 | -0.06 | -0.18% |
According to the latest research, the average monthly bill hovers between $200 and $299 per person, with some borrowers paying even more. federal reserve data.
In total, borrowers resumed payments of about $10 billion per month in October, according to a separate JPMorgan analysis.
Agnes College graduates will participate in the 2022 Agnes College Commencement Ceremony on May 14, 2022 at Agnes Scott College in Decatur, Georgia. (Photo by: Paras Griffin/Getty Images/Getty Images)
“Student debt delinquency is not reported until later this year, so we cannot see it in our data, but some of it can and does spill over into other debts,” the researchers said. Ta. Said. “The resumption of payments could increase pressure on that group in particular, but also on others.”
The restart of student loan payments comes as consumers continue to face soaring interest rates and soaring prices for everyday goods, rapidly eroding their purchasing power. Experts say additional student loan payments could cause a financial shock to millions of Americans.
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Many borrowers wanted their loans canceled, but the Supreme Court last year struck down Biden’s student loan plan that would have canceled up to $20,000 in loans per borrower.
since then, the white house announced Other efforts to reduce student loan debt include erasing $127 billion in debt owed by about 3.6 million borrowers.
