U.S. households are accumulating debt at a pace not seen in over three decades, as increasing numbers turn to credit cards and unsecured loans to manage their finances amidst rising living costs. This trend underscores the challenges faced by policymakers attempting to alleviate the financial strain on consumers.
Figures from the Bank of England reveal that consumer borrowing rose by £2.46 billion in the past month. This marks the most substantial increase recorded in data stretching back to 1993. The figures encompass various forms of credit, including car financing, personal loans, and credit card lending, which experienced its fastest growth since 2004.
The surge in borrowing suggests that consumers are increasingly relying on credit to maintain spending levels as escalating energy and fuel prices diminish their disposable income. A separate survey indicates that only 35% of workers can afford discretionary spending like savings or holidays after covering essential bills, a decrease from 45% a year prior.
The same survey, conducted by accountants PwC, also found that 59% of workers feel stressed in their jobs due to the cost of living pressures. These pressures manifest as increased stress, longer working hours, or a desire to seek new employment. Workers also expressed concerns about the potential impact of economic volatility and artificial intelligence on their job security.
Economists suggest that the rise in household borrowing, coupled with declining savings, is helping individuals