"US Consumer Responses to 'Overdue Within 3 Months' Reach Highest in 4 Years"

The Highest Level Since April 2020

The number of American consumers who feel they are about to fall into delinquency due to inability to repay debt has increased to the highest level since April 2020.

According to the September Consumer Expectations Survey (SCE) released by the Federal Reserve Bank of New York on the 15th (local time), the percentage of respondents who expect to fall behind on debt payments such as loan interest within the next three months rose for the fourth consecutive month to 14.2%. This is the highest level since April 2020, right after the pandemic.

In particular, the New York Fed explained that this response increased most significantly among middle-aged groups aged 40 to 60 and households with annual incomes exceeding $100,000. This rise in delinquency expectations emerged amid increased household burdens due to inflation and high interest rates, widening the gap between households benefiting from rising asset prices such as real estate and stocks and those that do not.

Credit card debt among American households is already showing warning signs. According to the Household Credit Report previously released by the New York Fed, U.S. credit card debt in the second quarter rose by $27 billion (5.8%) year-over-year to $1.14 trillion, setting a record high. The credit card delinquency rate (over 30 days) also increased to 9.1%, marking the highest level in 13 years since the first quarter of 2011 (9.7%), when the effects of the financial crisis lingered.

The New York Fed noted, "Especially, the credit card delinquency rate was high among the younger generation aged 18 to 39," adding, "Those with short credit histories and low credit limits, who are financially vulnerable, may have overborrowed during the pandemic."