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As the pace of the U.S. economic recovery accelerated, Americans cut $49 billion in credit card borrowing in the first quarter. In the context of the economic recovery, Federal Reserve researchers described this move as “confusing” and “confusing.” Significantly”.
A report by the Federal Reserve Bank of New York shows that in the first three months of this year, total US household debt reached a record of $1.46 trillion, an increase of 0.6% from the fourth quarter of last year. This is because the source of mortgage loans is still close to a record high. Points and balance. Car and student loans increased.
However, since 1999, credit card balances in the United States have fallen by the second largest amount in the statistical series, second only to the $76 billion decline in the second quarter of last year, because the pandemic forced the US economic blockade, the New York Federal Reserve said.
Researchers from the Federal Reserve Bank of New York said in a blog post: “One of the most confusing changes in debt balances is the change in credit cards.” “The decline in the first quarter of 2021 is staggering because of the reopening of the US economy. This is in stark contrast to the recovery of the retail industry when travel resumed.”
The decline in credit card balances helped offset the growth in auto and student loan balances, reducing non-housing balances by $18 billion from the previous quarter. Mortgage originators, including refinancing, reached US$110 million, only slightly lower than the record in the fourth quarter of last year. This was because the balance of mortgage loans increased by US$117 billion to US$10.02 billion.
Researchers from the Federal Reserve Bank of New York warned in a blog post that the “variable and irregular” impact of the pandemic on consumer borrowers means that “declining credit card balances should be interpreted with caution.”
But they added: “The rise in retail sales indicates that stimulus measures, tolerance plans, increased consumer confidence, and suppressed demand may both support consumption and help borrowers reduce expensive revolving debt balances.”
Researchers at the Federal Reserve say that it seems that both high-income and low-income families are paying off credit card debt. But they added that compared with older borrowers, young people have borrowed more on bank cards in recent months.
“We think this reflects to some extent different responses to the risk of the virus itself-young people have begun to resume their external activities, while the elderly are more likely to be cautious about this risk and choose to stay at home,” they said. .
The report also emphasized the reshaping of the US financial landscape by the government and bank tolerance plans.
When the pandemic began, the consumer credit default rate dropped further below its level. The Federal Reserve Bank of New York stated that 3.1% of outstanding household debt is in arrears, 1.5 percentage points lower than the first quarter of 2020.
Since 1999, foreclosure rights have reached the lowest level in the statistical series.
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