Inflation has been running hot for the past year. During the pandemic, the U.S. government sent out three stimulus checks. In addition, there were several programs to ease the impact of sheltering-in-place.
Debt Forbearance was one such program. For 18 months we could avoid our monthly rent, student loan, car payment, mortgage, and even credit card payments without any adverse effect to our credit ratings. Many of us could collect unemployment benefits that were extended and increased through an ‘extra unemployment’ amount granted by government.
All of that has ended, and two signs appeared that spending in the current inflationary environment have given an indication that consumers are struggling to make ends meet. Recently, the savings rate has fallen, and along with dipping into our savings, credit card use has increased. In March, consumer credit jumped by $52 billion, according to the U.S. Federal Reserve. Revolving credit, mostly credit card balances, increased $31 billion, approximately three percent. Non-revolving credit, including student and auto loans, increased $21 billion….