Consumers have undertaken an astounding project instead of consuming: Paying down their credit cards. In September, outstanding balances of credit cards and other revolving credit ticked down by a tad to $949 billion, not seasonally adjusted, the lowest since July 2017.
….many spending options disappeared: Vacations in foreign countries, cruises, even domestic flights to see friends, and the like were taken off the to-do list, and that money wasn’t spent. And some people refinanced their mortgages to take cash out of their home. And others stopped making payments on their mortgages and moved them into forbearance programs. And some people stopped paying rent, now that eviction bans are in place. And the whole flow of consumer money changed course.
Inexorably, student loans continue to surge, despite declining enrollment since 2010. In Q3 outstanding student loan balances jumped by $23 billion from Q2, to $1.7 trillion, and were up $54 billion from a year ago.
Total consumer debt – student loans, auto loans, and revolving credit such as credit cards and personal loans but excluding housing-related debts such as mortgages and HELOCs – rose by $51 billion in Q3, to $4.14 trillion, not seasonally adjusted, after having dipped for the prior two quarters. Year-over-year, given the 9.2% decline in credit card balances, total consumer credit was up just 0.6%, the smallest year-over-year increase since the declines in 2010:State of the American Debt-Slaves, Q3 2020: The Stimulus & Forbearance Phenomenon | Wolf Street