But old spending habits die hard it seems. Some of the latest consumer credit data show that credit card spending and debt levels are once again on the rise.
“People have been paying off their credit cards very quickly during the pandemic, and that’s starting to slow as people have started to wear down their buffer of excess savings,” said Leo Feler, senior economist with the UCLA Anderson Forecast.
The shifts are likely a reflection of consumers moving up their Christmas shopping spending to October to try to head off supply chain constraints, he said. The higher levels of credit card spending and increased debt loads are also indicative of spending patterns returning to normal, he added.
As of December 2021, US household debt totaled $14.89 trillion according to Moody’s Analytics, the highest level since Moody’s began tracking the category in 2005.
The biggest driver of debt was not credit cards, but mortgage debt fueled by the housing boom.
During the coming months, Quinlan said he anticipates that savings rates may continue to fall while credit card balances likely will grow. Those trends very well could taper off around May, he said. That’s when Wells Fargo economists expect inflation levels to come back to Earth.