When looking at the latest debit and credit card spending data out of Bank of America two weeks ago, one thing stood out: usage of credit cards among the lower income cohort has spiked with a 23% growth rate over a 2-year period, up from the summer average of 15%. This surge in credit card usage came at the expense of debit card spending growth which has slowed notably over the last several weeks. In turn, this was the result of various emergency stimulus programs expiring at the start of September, which meant far less cash in various deposit/checking accounts, and also meant the go to funding source would be America's favorite: credit cards.
Moments ago, the latest Consumer credit data confirmed this, when the Federal Reserve reported that in September total consumer credit soared by $29.9BN, almost double $16BN expected, and well more than 100% higher compared to August.
And sure enough, after shrinking for 2 consecutive months, credit card debt soared by just shy of $10 billion - the second highest this year- and pushed the total revolving credit outstanding back over $1 trillion for the first time since April 2020.
As for non-revolving credit, it always rises and September was no difference as debt used to pay primarily for cars and college, jumped by $20.1 billion to a new record high of $3.357 trillion.
And yes, drilling into the latest student and car loan number shows that, sure enough, we just hit another all time high.
In short, after a period of relative quiet when revolving credit shrank and then barely grew in the aftermath of the covid pandemic, it now appears that things are largely back to normal with credit cards serving as the primary source of discretionary funding for most Americans. We bring this up just in case you hear from some macrotourist that America's middle (and lower) class still has trillions in "excess savings" left, which they clearly don't as we explained two weeks ago...