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Yahoo
19-05-2025
- Business
- Yahoo
Americans' Consumer Debt Hits All-Time High of $18.2 Trillion, Experts Say Some Borrowers 'Will Have A Much More Difficult Time Getting Credit' Going Forward
American consumer debt hit $18.2 trillion in the Q1 2025, according to the Federal Reserve Bank of New York While credit card and auto loan balances are both declining, student loan debt and mortgage balances have increased Student loan debt was also identified as the primary driver behind delinquent debt, which increased 4.3% over the last quarter Americans' consumer debt hit an all-time high in the Q1 2025, according to the Federal Reserve Bank of New York's "Quarterly Report on Household Debt and Credit." The report, which was released Tuesday, says that household debt is at $18.2 trillion, up $167 billion since Q4 2024. In two categories, credit card balances and auto loan balances, Americans are actually lowering their debt loads. According to the report, credit card balances fell by $29 billion and auto loan balances decreased by $13 billion. Don't Miss: Hasbro, MGM, and Skechers trust this AI marketing firm — Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – However, Ted Rossman, a senior industry analyst at Bankrate, told CNN, "Don't be fooled by the modest decrease[s]. Credit card balanc es and interest rates remain near record highs." According to Rossman, credit card balances are 54% higher than they were four years ago, and auto loan balances have gone up by 19% over the same period. The long-term upward trend of credit balances is unsurprising. The NY Fed's data does not account for inflation, or factor in things like population growth, the rise of e-commerce, or the strength of consumer spending. What is surprising to analysts and experts, however, is the drop in auto loan balances. These fell for the first time since 2011, according to CNN. Matt Schultz, chief consumer finance analyst at LendingTree, explained the phenomenon to CNN. "I think it's a combination of people not buying [cars] because of high interest rates and high prices and also just the amount of uncertainty that we have had in the economy the last few months," he said. "That may have spurred people to hunker down a little bit." Trending: Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — Two other categories of consumer debt, student loan balances and mortgage balances, saw an increase in debt loads. Student loan balances grew by $16 billion to $1.63 trillion, and mortgage balances went up by $199 billion to $12.8 trillion. Aggregate delinquency rates also rose this quarter, with 4.3% of debt now in some stage of delinquency. Student loans are one of the chief drivers of delinquent debt. After a 3.5 year pause on payments and the end of President Joe Biden's one-year "on-ramp" extension, student loans payments have resumed in full as of Sept. 30, and missed payments now affect credit reports. According to the NY Fed's new report, student loan delinquencies have jumped from 1% to 7.74% in the Q1. While half of the newly delinquent borrowers already had subprime credit scores, 2.4 million others had scores of above 620 and saw them drop more than 140 points. Charlie Wise, head of global research and consulting at TransUnion, told CNN this could have severe impacts on the average borrower. "Consumers who previously would have had very good access to most credit products, including mortgages, now will have a much more difficult time getting credit — if at all," he said. Read Next: Nancy Pelosi Invested $5 Million In An AI Company Last Year — Maximize saving for your retirement and cut down on taxes: . Image: Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Americans' Consumer Debt Hits All-Time High of $18.2 Trillion, Experts Say Some Borrowers 'Will Have A Much More Difficult Time Getting Credit' Going Forward originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
09-05-2025
- Business
- Bloomberg
Fed's Williams Says Crucial to Anchor Inflation Expectations
Federal Reserve Bank of New York President John Williams said keeping inflation expectations anchored near policymakers' target forms the 'bedrock' of central banking. A 'critical lesson' for central bankers is 'the importance of maintaining well-anchored inflation expectations, especially when uncertainty is very high,' Williams said in the text of remarks he's scheduled to deliver at a conference in Reykjavik, Iceland.
Yahoo
14-04-2025
- Business
- Yahoo
Americans braced for biggest unemployment rate jump since the pandemic as tariffs muddy outlook
Unemployment concerns are on the rise among American workers as fears about the labor market in March reached levels last seen during the pandemic, according to a new survey released by the Federal Reserve Bank of New York on Monday. The NY Fed's survey showed mean unemployment expectations among respondents — or the mean probability that the US unemployment rate will be higher one year from now — jumped 4.6 percentage points to 44% last month, the highest level since April 2020. The average expected likelihood of becoming unemployed in the next 12 months increased by 1.6 percentage points in March to 15.7%, the highest level since March 2024. The increase was largest for respondents with annual household incomes below $50,000. Meanwhile, the average probability of leaving one's job voluntarily in the next 12 months ticked up only slightly, rising by 0.4 percentage point to 18%, far below the 12-month trailing average of 19.7%. The survey, which also noted declining expectations around household income growth, comes as Trump's tariff whipsaw has wrecked havoc on consumers' (and Wall Street's) expectations about the future of the US economy. In recent months, labor market data has held up well, with March's jobs report delivering an unemployment rate of 4.2% with 228,000 new jobs added. But even the Federal Reserve expects a weakening of the labor market over the next few years. The central bank recently raised its 2025 unemployment rate forecast to 4.4%, up from its prior 4.3% estimate. It expects unemployment to tick down to 4.3% in 2026 and remain at that level through 2027. Some economists on Wall Street are even more pessimistic as concerns over stagflation — in which growth stalls, inflation persists, and unemployment rises — have kept Wall Street on edge with shifting trade dynamics risking a self-inflicted recession. JPMorgan economist Michael Feroli, for example, has maintained his forecast of a 5.2% unemployment rate for 2025. Along with unemployment, consumers are also increasingly concerned about the inflation outlook. According to the NY Fed's survey, average year-ahead inflation expectations increased by 0.5 percentage point to 3.6%. Inflation expectations were unchanged at 3.0% at the three-year-ahead horizon, and decreased by 0.1 percentage point to 2.9% at the five-year-ahead horizon. Notably, inflation did slow considerably last month, although economists continue to caution that current tariffs — along with increased levies on China — will likely lead to faster price growth. "This could easily be the last really good CPI day for a while," Claudia Sahm, former Federal Reserve Board economist and current chief economist at Century Advisors, told Yahoo Finance following the data's release last week. "The tariffs that have gone into effect [but] it's going to take time for it to show up in the data." Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at
Reuters
14-04-2025
- Business
- Reuters
NY Fed: March near term inflation expects jump amid souring sentiment levels
Summary NY Fed March consumer survey finds near-term rise in expected inflation Longer-term expected inflation projection tamer in March Fed officials have focused on longer-run expectations in policy debate April 14 (Reuters) - Americans' expectations for near-term inflation hit the highest level since the fall of 2023 in March, amid a souring in the public's assessment of their personal finances and hiring prospects, a report from the Federal Reserve Bank of New York said on Monday. The bank said that in its latest Survey of Consumer Expectations, respondents see inflation a year from now at 3.6%, up from 3.1% in February, matching the same level last seen in October 2023. The rise came as households predicted accelerating inflation for food and rent, but smaller gains for gasoline and home prices. The sharp increase in near-term expectations came as the projected level of inflation three years from now held steady at 3%, while the forecast for inflation in five years tipped down to 2.9% in March from 3% the prior month. The mixed outlook for inflation came in a report that found a broad decline in survey respondents' views on where the economy is heading. Households in March said they see slower future income and earnings gains, while expectations that unemployment will rise hit its highest level since April 2020. The New York Fed consumer expectations data lands in a climate where other indicators are pointing to a deteriorating economic situation, as President Donald Trump pursues an aggressive trade war heavily reliant on the highest levels of tariffs in decades. Economists and the public believe these import taxes will lead to increases in inflation pressures, although there's great uncertainty about how long the boost in price pressures will last. The New York Fed data pointing to confidence that longer-term inflation pressures will remain in check stands at odds with other closely watched surveys, opens new tab like that of the University of Michigan, which found that in April the expected level of inflation five years from now was at its highest since June 1991. With economic conditions highly unsettled and current levels of inflation already above the Fed's 2% target, Fed officials have over recent days flagged the particular importance of keeping longer-run expectations stable, noting shorter-run projections are generally more volatile and reactive to fast- moving factors. 'Despite the recent rise in short-term inflation expectations, longer-term expectations have remained well anchored,' New York Fed President John Williams said on Friday, adding 'it is critically important' to maintain that situation. Speaking with reporters on Thursday, Chicago Fed President Austan Goolsbee said 'if you start to see that people fundamentally don't think that over the long run we're getting back to 2%, that's a problem.' The Fed's policy outlook is particularly complicated at the moment as it faces both rising inflation pressures and the strong likelihood of weaker growth. Thus far central bankers are taking a wait-and-see approach to their next interest rate move, but some analysts see the chance more bad news on longer-run inflation expectations could tip the scale in a hawkish direction. 'Fed speakers have stepped up the message that the focus now is on maintaining stable inflation expectations, and the underlying message is that effort could require rate hikes,' said SGH Macro Advisors. The March New York Fed data also found that households are finding it harder to get credit, with March also seeing a small increase in those who view their financial situation negatively. Households said the probability that stocks will rise ebbed to its lowest level since June 2022.
Yahoo
14-04-2025
- Business
- Yahoo
Americans braced for biggest unemployment rate jump since the pandemic as tariffs muddy outlook
Unemployment concerns are on the rise among American workers as fears about the labor market in March reached levels last seen during the pandemic, according to a new survey released by the Federal Reserve Bank of New York on Monday. The NY Fed's survey showed mean unemployment expectations among respondents — or the mean probability that the US unemployment rate will be higher one year from now — jumped 4.6 percentage points to 44% last month, the highest level since April 2020. The average expected likelihood of becoming unemployed in the next 12 months increased by 1.6 percentage points in March to 15.7%, the highest level since March 2024. The increase was largest for respondents with annual household incomes below $50,000. Meanwhile, the average probability of leaving one's job voluntarily in the next 12 months ticked up only slightly, rising by 0.4 percentage point to 18%, far below the 12-month trailing average of 19.7%. The survey, which also noted declining expectations around household income growth, comes as Trump's tariff whipsaw has wrecked havoc on consumers' (and Wall Street's) expectations about the future of the US economy. In recent months, labor market data has held up well, with March's jobs report delivering an unemployment rate of 4.2% with 228,000 new jobs added. But even the Federal Reserve expects a weakening of the labor market over the next few years. The central bank recently raised its 2025 unemployment rate forecast to 4.4%, up from its prior 4.3% estimate. It expects unemployment to tick down to 4.3% in 2026 and remain at that level through 2027. Some economists on Wall Street are even more pessimistic as concerns over stagflation — in which growth stalls, inflation persists, and unemployment rises — have kept Wall Street on edge with shifting trade dynamics risking a self-inflicted recession. JPMorgan economist Michael Feroli, for example, has maintained his forecast of a 5.2% unemployment rate for 2025. Along with unemployment, consumers are also increasingly concerned about the inflation outlook. According to the NY Fed's survey, average year-ahead inflation expectations increased by 0.5 percentage point to 3.6%. Inflation expectations were unchanged at 3.0% at the three-year-ahead horizon, and decreased by 0.1 percentage point to 2.9% at the five-year-ahead horizon. Notably, inflation did slow considerably last month, although economists continue to caution that current tariffs — along with increased levies on China — will likely lead to faster price growth. "This could easily be the last really good CPI day for a while," Claudia Sahm, former Federal Reserve Board economist and current chief economist at Century Advisors, told Yahoo Finance following the data's release last week. "The tariffs that have gone into effect [but] it's going to take time for it to show up in the data." Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at Sign in to access your portfolio
