Young and low-income consumers are starting to feel financial pressure from record inflation.
NEW YORK - As high inflation forces Americans to spend more on gas and bills, young and low-income consumers are starting to feel financial pressure.
For months, things have been looking good for U.S. consumers, their bank accounts padded by government stimulus, student loan forbearance and pandemic-era savings. Bank executives have consistently said consumers have healthy financial cushions and are spending money despite high inflation and the slowing economy.
Federal Reserve Chairman Jerome Powell has said the clock is running out to bring down inflation, which is hovering at levels not seen since the 1980s. Among non-prime borrowers, the percentage of credit card and auto loans that were more than 30 days past due also rose, VantageScore found. Credit card delinquency rates are now back to their pre-pandemic levels for young people and non-prime borrowers, the data showed.
TransUnion, one of the big three consumer credit ratings agencies, estimates credit card delinquency rates could rise to 8.4% in the first quarter of 2023, up from 8% in the first quarter this year, if inflation remains high. An executive at one large U.S.-based auto lender that works with many non-prime consumers said that demand has upended the maxim that a car loses value as soon as it leaves the dealer.
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