Signs are multiplying that Americans are struggling to keep up with their bills — and Wall Street is getting worried.
A recent survey by the Federal Reserve Bank of New York found that around 9.1% of credit card balances turned delinquent over the past year — the highest rate in more than a decade.
The same study found that 8% of balances on auto loans were overdue — the highest rate since 2010.
Banking executives told the Wall Street Journal over the weekend that the increasingly heavy burden of soaring grocery costs and high interest rates on credit cards are causing greater delinquencies.
Citigroup chief financial officer Mark Mason told bankers at Barclays banking conference last week that clients’ balances have accumulated at a higher rate than usual even as delinquencies have picked up. Growth in spending is driven mainly by Citi’s affluent customers, he said. Russ Hutchinson, the CFO of auto lender Ally Financial, told the Journal that his company has seen an uptick in late payments and charge-offs — when a lender deems a loan as unlikely to be collected and writes off the debt as a loss — on auto loans.
“What that tells you is if people do get behind on their payments in this environment, it’s tougher to get out of them,” Moshe Orenbuch, an analyst at TD Cowen, told the Journal.
“In general, this has been a bigger issue for people in the bottom half of the income spectrum.”
The jitters on Wall Street are rising as the US economy remains a top issue in the 2
