A larger percentage of credit card holders have fallen behind on monthly payments as high interest rates continue to ravage household finances. Furthermore, according to the Federal Reserve, households were holding a record $17.5 trillion in debt last year; including record credit card and vehicle debt.
The percentage of American’s that fell behind on monthly payments reached an 11+ year high to hit approx. 3.2%, up from a decade high of 2.8% witnessed last year. Tax season couldn’t have come soon enough as a LendingTree survey showed that 40% of American’s relied on refunds to make ends meet. This figure is more important than ever before because its up 4% from last year, representing a 12% gain.
This year nearly half the country will be using their tax refund to spend on essentials and pay down debt rather than spend on entertainment and/or invest in the stock market. Market participants can be sure that the Federal Reserve is well aware of this trend and will incorporate it into its inflation expectations that will influence monetary policy.
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