Chart of the Day: Consumer Getting Stretched

Higher interest rates making debt-fueled spending even more expensive

Credit card debt has risen 15% over the past year and reached a new high in November. The cost of servicing that debt has surpassed its pre-COVID level and is at its highest level in over a decade.

Why it matters: Household balance sheets were their healthiest in decades in the wake of COVID-related shutdowns, thanks in large part to curtailed spending and several rounds of fiscal stimulus. Now however weekly paychecks are shrinking and consumers are fueling their spending by increasing credit card debt. Combined with rising interest rates, that added debt is pushing servicing costs to levels not seen since 2008. Consumers are facing less liquidity and economic flexibility at a time when economic pressures continue to rise.