Falling into a "debt snowball" dilemma! US consumer unpaid debt unexpectedly surged in December last year.

In December of last year, American consumers' unpaid debts unexpectedly surged, marking the largest increase on record, driven mainly by a significant rise in credit card balances and non-revolving credit (such as auto loans and tuition loans). According to data released by the Federal Reserve on Friday, total credit in the United States surged by $40.8 billion in December, compared to a revised decrease of $5.4 billion the previous month. This unadjusted figure far exceeded economists' expectations in a Bloomberg survey. Specifically, credit card and other revolving credit increased by $22.9 billion in December, significantly surpassing the previous month's decrease. Meanwhile, non-revolving credit (such as auto loans and tuition loans) increased by $18 billion, the highest growth in two years. According to data from Ward's Automotive Group, US auto sales at the end of last year rose to the fastest pace since May 2021. In 2024, total unpaid credit for American consumers increased by 2.4%, similar to the previous year's growth rate. However, despite a robust job market continuing to drive consumer spending growth, high levels of inflation and borrowing costs are adding to household financial burdens. As of November last year, the average interest rate on credit card accounts reached 22.8%, close to the highest level since the Federal Reserve began tracking in 1995. Federal Reserve officials expect a more moderate pace of rate cuts this year, with overall rates possibly being reduced by one percentage point in 2024. However, high borrowing costs have led more American consumers into a "debt trap." According to data released by the Federal Reserve Bank of Philadelphia last month, in the third quarter of last year, an increasing number of Americans were only making minimum payments on their credit cards, reaching a historical high. Meanwhile, credit card delinquency rates are also increasing. Data shows that about 3.5% of credit card balances are overdue by more than 30 days, with 1.8% of accounts already severely overdue. Both of these figures are more than double the lowest levels seen after the 2021 pandemic, indicating that the debt risk for American consumers is rising. Under the dual pressures of high inflation and high interest rates, American consumers' debt burden continues to increase, which could further impact consumer spending and overall economic growth. In the future, the Federal Reserve's monetary policy adjustments and changes in the job market will be key factors affecting consumer debt levels.