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Almost 27 percent of U.S. consumers have applied for a new credit card in the past 12 months, according to an October survey by the Federal Reserve Bank of New York, the most since 2019 and far surpassing 2020’s record low rate of 16 percent.
“Many things are slowly returning to more normal times,” Wilbert van der Klaauw, New York Fed senior vice-president, told The Wall Street Journal.
“With that, you expect the demand for credit to come back to pre-[COVID] levels and continue on the same growth path,” he said.
About 11 percent of survey respondents said they had applied for credit-limit increases on existing cards, up from 7 percent in 2020.
The survey’s results indicate that consumer spending will remain strong and continue to power the U.S. economic recovery, according to the WSJ.
TREND FORECAST: The global economy is balanced on a knife edge of debt. As we reported in “Consumer Debt Soars” (13 Jul 2022), lenders issued almost six million general-purpose credit cards in March, more than in any other March and 32 percent more than in March 2020.
About 1.4 million of those new credit cards were given to people with subprime credit scores, a 28 percent increase from 2020 and 19 percent above 2019, the WSJ noted.
Around the world, government and corporate debt, including junk bonds, also have reached record levels.
Any significant, adverse economic event—such as another lockdown— could spin tens of millions of households and businesses into default or bankruptcy.