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Several reports outlined that young consumers or people with low-income are expected to experience the financial pressure given the high inflation. It is expected that inflation could make them spend more of their earnings on their usual expenses on gas and bills, etc. Recent stats shows that the low credit score consumers are lagging behind in terms of credit card, gathering credit card debt and paying auto loan bills.
According to the report shared by a credit score company which analyzed about 12.5 million credit files of US citizens brought some crucial figures. The reports say that the credit card balances for younger people have risen.
Consumers in the United States seemed to be in good positions due to several reasons. They were taking advantage of government stimulus like schemes during the pandemic that ended up saving them enough funds. Many bank executives have agreed to this that American consumers have found this as a quite comfortable financial cushion. This is given the fact that their spending rose despite the conditions like slow economic growth and high inflation.
VantageScore President and CEO—Silvio Tavares said that there were signs like Americans were more likely to spend on traveling and dining out and focusing less on paying down their credit card debts. Tavares found the discrepancy here in consumer behavior.
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Tavares added that the consumers are in a relatively stronger situation than earlier. They now have strong balance sheets and debt repayment history. Still he thinks that areas of concern are there such as adding leverage by the consumers.
On Thursday, US consumer spending data was witnessed to grow at quite a slow pace in comparison to the last two years. This came in such scenarios where the economy contracted during the second quarter out of expectation.
Tavers said that although there are no concerns around delinquency rates for now, it is going to be something that is needed to be taken care of. This should even be taken as a prior indication of upcoming damage.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
