CEOs typically don't give warnings when their business is growing. But JPMorgan CEO Jamie Dimon was right to draw attention to credit cards this summer. “We've been earning too much on credit for a long time,” he told investors. "We are quite aware of that." The debt is increasing. But in recent years, American consumers with pandemic stimulus cash have had little difficulty making payments. Delinquencies and credit card cancellations were abnormally low in the second quarter of the year. This meant that banks like JPMorgan did not have to set aside the kind of loss reserves that can hit profits. Now the credit cycle is returning to normal. In August, the Federal Reserve Bank of New York's annual report on American household finances showed that American credit card balances surpassed $1 trillion for the first time in the second quarter of the year. This is 16 percent more than last year.
It outpaces the growth of auto and student debt, as well as mortgages. Just as important, the New York Federal Reserve declared that delinquencies (balances more than 30 days past due) had returned to 2019 levels. Among Jordan Mobile Number List those with the lowest credit scores, delinquency rates have doubled since the lowest point of 2021. For banks, the excess profits Dimon pointed to may have already begun to moderate. Rival Bank of America's credit card delinquency rate, at 2.6 percent, is just 40 basis points below 2019 levels. The question is how softly the US economy can land. According to research from the San Francisco Federal Reserve, the total “excess savings” of American households peaked at $2.1 trillion in mid-2021. By March 2023, much of that had disappeared. Researchers estimated $500 billion remained.

There is some hope that this could prevent a sudden spending cut. However, even with this cushion, consumers face high prices and higher debt service costs. Student loan forbearance policies have come to an end. For those carrying credit card balances, the average interest rate is now above 20 percent, up from the mid-teens before the pandemic. High maintenance costs will soon reduce savings. Our popular newsletter for premium subscribers is published twice a week. On Wednesday we looked at a hot topic in a global financial center. On Friday we analyzed the big topics of the week. Please register here.