Late payments on credit card balances are surging, potentially signaling a recession, as delinquencies hit an all-time high among commercial banks outside of the top 100, according to Wells Fargo.
As student loan payments resume, major retail and food chains in the US are warning investors about a potential slowdown in consumer spending, with retailers like Macy's, Target, and Ulta identified as particularly vulnerable due to their exposure to younger, low-income consumers with student loans.
Macy's is reporting a significant increase in the number of customers failing to make credit card payments, leading to a decrease in credit card revenue and raising concerns about the broader state of the US economy.
Macy's second quarter credit card sales declined due to high delinquencies and rising interest rates, highlighting the challenges facing US consumers and sending warnings to other retailers, causing investors in retail stocks to be cautious.
Despite overall solid consumer spending, retail earnings reports indicate a shift towards more cautious shopping habits, with lower-income shoppers feeling economic pressure and opting for essential items and discounts at off-price and discount retailers. Delinquencies on department store credit cards are rising, suggesting a stretched consumer, and retailers are bracing for the impact of the resumption of student loan payments on shoppers' budgets. The upcoming back-to-school season and Halloween will serve as indicators for the rest of the year and the holiday season.
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