Five charts to start your day

Does rising US credit card debt point to a cost-of-living crisis in the US?

Last year, US consumers spent 50 per cent more on credit cards than they did in 2020, coinciding with President Joe Biden entering office. This is the focus of the first chart today, a topic that has become highly politicised in the lead-up to the US elections.

Delinquencies on US credit cards have reached their highest level in 13 years, according to Moody’s Analytics. Meanwhile, the US Federal Reserve has raised interest rates to their highest level in almost 23 years. Republicans have naturally seized on this opportunity to argue that rising credit card debt points to a cost-of-living crisis among lower-income Americans under the Biden administration.

Elections, like the stock market in the short term, are highly sentiment-driven and emotional in their outcomes. However, for now, the strain on the banking system appears to be muted. In fact, banks and credit card companies are profiting due to a combination of higher interest rates and increasing credit card balances. Moreover, even if delinquencies rise on credit cards, it's unlikely to have much of an effect, as those with high credit card debt represent a minority of the American public.

As mentioned, this issue is more about politics than economics.

Source: Financial Times

Coming up:

• Eli Lilly and Novo Nordic compared to big tech

• US interest rates are no longer rising, but no one knows when they will fall

• Japan's workers secured their largest pay hike in more than 30 years

• Inflation expectations do not match financial conditions

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