American credit card debt in the first quarter of 2023 was at a record level of $986 billion having exceeded the previous high of $927 billion which took place in the fourth quarter of 2019.
One particularly interesting note is that debt was flat in March as compared to the December quarter whereas it declined in the first quarter of every prior year since 2001. Typically, Americans reduce debt a bit in the first quarter following the Christmas buying spree but it appears that they just kept spending in early 2023. Another interesting statistic is that 56% of credit card accounts carry a balance which means they are paying interest at a rate which averages 20.09% across all credit cards. While up from about 1.5% in 2021, the current delinquency rate of 2.25% is still quite manageable.
What to make of all of this? The consumer is still spending which suggests that the FED may have a way to go in cooling down the economy sufficiently to tame inflation. While still relatively healthy, some combination of rising interest rates, increasing unemployment, and high debt levels, could spell trouble for consumers if we actually experience other than a “soft landing.”