💳 Is A Credit Card Debt Crisis Brewing?

Good morning. US stock futures dipped in Monday morning trading as traders looked ahead to the Federal Reserve’s interest rate decision and May inflation data.

🛢️ US credit card debt levels continue to rise

📝 Our report: Seriously overdue credit card debt is at a decade-high, with folks under 35 struggling the most to keep up with their bills according to the latest report from the Federal Reserve Bank of New York. The end of pandemic-era aid such as stimulus payments, the child tax credit, increased unemployment benefits, and a moratorium on student loan payments has placed an increasing burden on young adults to get ahead of their credit card debt.

 🔑 Key points:

• The share of credit card debt that’s severely delinquent, defined as being more than 90 days overdue, rose to 10.7% during the first quarter of 2024, according to the Federal Reserve Bank of New York. A year ago, just 8.2% of credit card debt was severely delinquent.

• The average annual interest rate on a new credit card is 24.71%, according to LendingTree, the highest since the company began tracking in 2019.

• Credit cards only make up about 6.5% of consumer debt, according to a Bank of America Global Research report, but the increase in delinquencies appears to be outpacing income growth.

💡 So what: Rising credit card debt levels indicate growing financial stress among consumers, which can have several implications. Increased debt can lead to higher default rates, negatively impacting credit scores and limiting access to future credit. This can reduce consumer spending, which is a key driver of economic growth. Financial institutions may also face higher risk and potential losses, leading to tighter lending standards. Overall, rising credit card debt levels can signal potential economic instability and may necessitate policy interventions to support affected consumers and stabilize the economy.

Monday - No Major Economic News

Tuesday - NFIB Optimism Index

Wednesday - US Consumer Price Index, US Fed Interest Rate Decision

Thursday - No Major Economic News

Friday - Consumer Sentiment

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💳 Your 5-step guide to paying off credit card debt

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🧶 Saudis offer chunk of oil giant shares to foreigners

WHAT: Foreign investors snagged about 60% of the shares in Saudi Aramco's $11.2 billion stock sale, a sharp contrast to the oil giant's 2019 listing, which was more of a local party, according to insiders. The secondary offer drew about 450 funds, and more than 125 new international investors, people familiar with the matter said.

WHY: During the oil giant’s listing, overseas investors had largely balked at valuation expectations and left the government reliant on local buyers. The $29.4 billion IPO drew orders worth $106 billion, and just 23% of shares were allocated to foreign buyers.

📱 Social media giants triumph over addiction claims

WHAT: Meta Platforms and other social media giants scored a win, getting hundreds of school district lawsuits dismissed that sought to recover costs for dealing with the fallout from students’ social media use. A California state judge sided with Meta, Snap Inc., TikTok and Google in throwing out the districts’ allegations that social media has increased the cost of education because it makes students more distracted and disruptive, driving up the need for classroom discipline, employee training and communication with parents.

WHY: The cases are among hundreds in state and federal court alleging that social media platforms are designed to be addictive and are dangerous for youths.

🛒 Retail chain opposes panic buttons in stores

WHAT: Retail giant Walmart isn’t thrilled about the idea of installing panic buttons in its stores, despite New York lawmakers pushing for it under a new safety law for retail workers. The law, which is a reaction to rising threats to store clerks from thefts and violence, was already passed by the state's Assembly and now goes to Governor Kathy Hochul for signature. Retail groups have criticized the law in part because installing the panic buttons would be costly.

WHY: The panic button provision of the New York law would go into effect in 2027 for retailers with more than 500 employees nationwide. The legislation would also require most retailers with 10 or more employees to provide violence prevention and safety training to their staff.

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