Why credit card debt has fallen to record amounts during the pandemic
Despite a recession and high unemployment, Americans have paid off their credit cards. But can it last?
$ 100 billion: This is the amount that the credit card debt of the United States decreased from February to June. Yes, you read that right: in the throes of an economic collapse fueled by a pandemic that left around 30 million Americans unemployed and GDP down 9.5% in Q2, American credit card holders have, by and large, paid off their debts. Clearly, experts expected the opposite: massive unemployment would lead to increased plastic consumption. But according to the Wall Street newspaper analysis, government stimulus checks and additional unemployment benefits have provided an effective cushion for many.
But thaThis is not the whole story. The economy too seems to branch off even more than usual, with part of the workforce that has shifted to working from home driving up the savings rate because there are simply fewer opportunities to spend, and another part scrambling for a new job, hoping the government will act. together and implement a new cycle of relief. Right now, the separation between these two radically different scenarios is obscured by the numbers in the first line. But this split is likely to become more evident, and soon.
Place your bets: Will lawmakers be as responsible as credit card holders appear to be?