Millions of Consumers have Cut Their Debts, So Why are Financial Experts Sounding Alarm -

"And with stimulus payments a thing of the past and other unusual financial stabilization programs unwinding, the alerts are going out again, with experts warning about rising consumer debts."

Why this is important: Millions of Americans “improved their credit scores, cut debt, increased savings and hit other financial progress milestones” during the pandemic due, in part, to establishments being closed, moratoriums for several payment obligations like mortgages and student loans, and various stimulus and tax credits being advanced. Credit card delinquencies were at a record low and savings rates were high. While the financial picture became brighter for many, not everyone was so lucky. And, experts are waiting to see what happens when the various moratoria end and payments restart. Credit card usage is starting to increase for the first time in more than a year. Student loan forbearances are ending after over 18 months, which means nearly 25 percent of the U.S. population will need to figure out how to start making payments that, on average, total $400 a month. And, according to the experts, medical bills could cause a downward spiral if people charge them on credit cards. Bankruptcies are also at a historical low, but “are a lagging indicator, as people often don't file until after they have been struggling with debts for months or even years.” As the various pandemic assistance programs come to an end and people revert to pre-pandemic habits, both increased spending/debt loads as well as delinquencies will provide valuable information about how and when the U.S. economy will recover.