(Bloomberg) – The head of President Joe Biden’s Council of Economic Advisers says the tightening of U.S. consumer spending, including rising credit card delinquency rates, is primarily due to Americans’ debt returning to pre-pandemic levels. He said that it is shown in
As President Biden seeks a second term in 2024, Jared Bernstein, a leading advocate of Biden’s economic policies, says the U.S. is moving on from the inflation surge that has eroded Biden’s approval ratings. He cited rising wealth, a strong job market and rising real wages in 2023 as evidence. evaluation.
At the same time, consumer debt is rising as pandemic-era stimulus measures wear off. U.S. credit card balances rose about 4.7% to $48 billion in the third quarter, bringing the total to $1.08 trillion, according to data from the New York Fed. This is the highest amount recorded since 2003.
“Part of what you’re calling bulge is actually credit card delinquency and debt levels returning to normal levels,” Bernstein said on Fox News Sunday. “But if you look at how much it’s actually costing people to repay their debt, you’ll see that even with interest rates going up, they’re in a very good position with their debt.”
He said the 3.7% increase in disposable income over the past year is “one of the tailwinds supporting consumer spending.”
With inflation receding, economists increasingly expect the Fed to end its interest rate hikes and reduce borrowing costs next year. The University of Michigan Consumer Sentiment Survey rose to a five-month high in December, with Americans feeling more optimistic about the outlook for inflation than since 2021.
This is the kind of data the White House is counting on to convince voters of Biden’s stewardship of the economy. Asked about Biden’s 2024 agenda, Bernstein said, “There are two words: Cut costs.”
That means “building on the progress we’ve made” to lower the cost of items like insulin, prescription drugs and health care, as well as curb the so-called junk fees Americans pay for everything from concerts to banks, he said. Stated.
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