Rising Consumer Debt Threatens US Household Finances

Consumer spending in the US has been driving GDP growth, but it is not sustainable due to rising credit card debt and depleting pandemic savings. Banks are tightening lending standards, making it difficult for struggling households to obtain more credit. Excess savings are expected to be fully exhausted by Q2 2024, and a decline in consumer spending is likely. Factors such as the restart of student loan payments and maxed out credit cards could further limit consumers' ability to spend. However, consumers may be able to rely on their record-high home equity to sustain their spending habits.