Total Consumer Lending Sees ⁤Largest Increase Since November 2022

U.S. consumers are growing increasingly concerned ⁢about their job security and household debt, despite a perceived easing of inflation. According to the‍ August Survey of Consumer Expectations (SCE) conducted by​ the New York Federal Reserve Bank, respondents predict an inflation⁣ rate of ⁢3% for the ⁢next year​ and 2.8% for the next five years, consistent with the previous⁣ month’s expectations.

Consumers anticipate significant price increases for gasoline, rent, ⁢and medical expenses in ‌the coming year, with moderate increases expected for food prices ⁤and college tuition. However, concerns about debt repayment have ⁣risen ​for the third consecutive⁤ month, with 13.6%⁢ of respondents expecting to miss‍ debt payments in the ​next three ⁤months ​– a 0.3 percentage point increase‌ from the previous month and the highest level in four years and⁢ four months since the COVID-19 pandemic ‍began.

The ⁢labor market outlook ‌is⁢ mixed, ⁣with decreased concerns about unemployment offset by ‌reduced expectations about finding ​new employment opportunities. The likelihood of losing a⁣ job in the next 12 months⁣ has​ decreased to 13.3%, down 1 percentage point from the previous month and lower than the 12-month average ⁣of 13.7%. Conversely, the likelihood of voluntarily changing jobs has‍ fallen to 19.1% in‌ August, down from ‌20.7% the⁣ previous month.

The probability of re-employment ⁣after unemployment has ⁢also decreased, falling 0.2⁢ percentage points to 52.3% – lower than ⁣the 12-month average ⁣of 53.9%. However, expected increases in​ household income have risen​ 0.1 ⁤percentage points to 3.1%, and expected​ increases in consumption have also risen 0.1 percentage ⁢points to 5.0%.

Total ⁢consumer ‌debt in the U.S. has seen its largest ‌increase since November 2022, driven by growth in both revolving ​debt (such as credit card outstanding balances)‌ and ‍non-revolving debt​ (such as student⁤ loans). According to the Federal ⁢Reserve, total consumer loans borrowed by general consumers from financial institutions have increased by $25.5 billion​ compared to the previous ⁣month, surpassing expectations in a Bloomberg survey​ of economists.

Revolving ‍debt has risen $10.6 billion, the largest increase in five months, while non-revolving debt has surged $14.8 billion – the ⁢largest increase in over a ​year. This growth in​ consumer lending appears to⁤ have contributed to the rise ‌in retail sales, which saw its ‍largest increase in July since early 2023.

However,⁣ the⁣ proportion of auto loan delinquencies⁢ has increased by the largest ⁢amount⁢ since 2010, and the proportion of ​new ‌credit ​card delinquencies has also risen by the most in⁢ about⁣ 12 years to 9.05%.