Austan Goolsbee, President of the Chicago Federal Reserve Bank, warned about rising consumer delinquencies, which new data confirm are increasing significantly. In the first quarter of 2024, delinquency rates surged, with 3.2% of outstanding debt in delinquency, marking a rise in financial distress.
Credit card and auto loan delinquencies increased notably, while mortgage delinquencies rose slightly but remained historically low. Joelle Scally from the New York Fed highlighted worsening financial distress as more borrowers missed credit card payments. The Federal Reserve attributes this trend to multiple factors, including higher spending post-pandemic without adequate savings and increased lending to lower credit score borrowers. Policymakers must monitor these trends to mitigate potential economic fallout.
