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Rising Credit Card Delinquencies Signal Economic Worry

Rising Credit Card Delinquencies Signal Economic Worry

Consumers are increasingly struggling to pay their credit card bills, with severe delinquencies reaching a 12-year high of 10.7% in the first quarter, according to the Federal Reserve Bank of New York. This jump from 8.2% a year ago is the largest since 2012 and coincides with total credit card debt rising to $1.12 trillion. Young adults in their 20s and 30s are particularly affected, likely due to lower earnings and savings. The Federal Reserve's interest rate hikes have made borrowing more expensive, compounding the issue. While consumer spending is crucial for economic growth, rising debt stress could become a significant concern if the labor market weakens. Despite Wall Street's optimistic forecasts, retail spending has stalled, and major retailers like Walmart and Starbucks report shifts in consumer behavior. The Fed faces the challenge of controlling inflation without triggering a recession, as high borrowing costs and economic uncertainty persist.

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