01/29/24 08:40 AM EST

Credit Card Debt Continues to Skyrocket

Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

As equities make all-time highs, it’s nice to know how the bifurcated U.S. economy is doing. Savings rates are historically low, credit card debt is at all-time highs, credit card APRs are near all-time highs, and delinquencies are rising while admittedly low on a historical basis.

Americans' credit card debt has surpassed $1 trillion for the second straight quarter, now printing $1.079 trillion. This maintains a consistent pattern of third-quarter increases in credit card debt, a trend only interrupted in 2020 due to the COVID-19 pandemic. Since the fourth quarter of 2021, credit card balances have surged by $223 billion, now at $152 billion above the previous record set in the fourth quarter of 2019. Factors such as high interest rates and persistent inflation suggest that credit card debt may continue to rise in the foreseeable future. The pandemic and fiscal stimulus changed our behavioral spending habits.

While the 30-day delinquency rate increased to 2.98% in the third quarter of 2023, marking the eighth consecutive quarter of delinquency growth and the highest since the first quarter of 2012, it remains below the historical average since 1991 of 3.74% and the post-2000 average of 3.46%. These figures are still notably lower than the peak delinquency rates of nearly 7% experienced during the Great Recession.

Tomorrow, we will provide some analysis on auto credit, specifically subprime auto credit. An industry that was arguably one of the most affected by the pandemic. There are challenges there for both lenders and borrowers.

Learn more about the Market Situation Report written by Tier 1 Alpha.