(Bloomberg) — Strains on U.S. consumer spending, such as rising credit card delinquency rates, are largely an indication that Americans’ debt is returning to pre-pandemic levels, the chief said. President Joe Biden’s council of economic advisers.
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Jared Bernstein, a key advocate of Biden’s economic agenda as the president seeks a second term in 2024, cited wealth gains, a strong job market and rising real wages in 2023 as evidence that the U.S. are emerging from a surge in inflation that weakened Biden’s approval. evaluations.
At the same time, consumer debt has risen as pandemic-era stimulus programs fade. 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 Federal Reserve Bank of New York – the highest total since 2003.
“Part of what you call an explosion is actually a return to normal levels of credit card defaults or debt levels,” Bernstein said on Fox News on Sunday. “But if you really look at how much it costs people to pay off their debt, even though interest rates have gone up, they’re doing pretty well.”
A 3.7% increase in disposable income over the past year is “one of the tailwinds helping to support consumer spending,” he said.
As inflation recedes, economists are increasingly betting that the Fed will be done with raising interest rates and will reduce borrowing costs next year. A University of Michigan consumer confidence survey hit a five-month high in December, and Americans are more optimistic about the outlook for inflation than they have been since 2021.
That’s the kind of data the White House is counting on to persuade voters about Biden’s handling of the economy. Asked about Biden’s 2024 agenda, Bernstein said: “I have two words to say to you: cut costs. »
That means continuing to “build on the progress we’ve made” in reducing costs for products like insulin, prescription drugs and health care, as well as reducing so-called unwanted costs that Americans pay for everything from concerts to banks, he said.
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