URGENT UPDATE: Californians are tightening their financial belts as borrowing slows and late bill payments spike, signaling mounting economic stress. New data from the Federal Reserve Bank of New York reveals alarming trends in consumer debt and payment habits as of September 2023.
In a disconcerting shift, the average consumer debt per Californian reached $87,570, reflecting a 1.2% increase from last year. This marks a significant slowdown, down from 2.9% growth in the previous 12 months, and is the lowest annual increase since 2003. With rising financial anxieties, many Californians are reducing their borrowing, as evidenced by an 18% drop in the Conference Board’s California consumer confidence index over the past year.
While borrowing trends in California paint a bleak picture, the national average consumer debt rose to $63,340, an increase of 2.5% year-over-year. This contrasts sharply with California’s decline and highlights the state’s unique economic challenges.
Late payments are also on the rise. In the third quarter, 2.01% of California consumer bills were reported as 90 days or more late, up from 1.9% in the previous quarter. This is the highest level of unpaid debts since the onset of the pandemic in early 2020. However, California’s delinquency rate remains below the national average of 2.98% for the same period.
Despite these troubling figures, California fares better than its economic rivals. In Texas, the late payment rate stands at 3.85%, while Florida sees a staggering 4.1%. Additionally, the state’s debt levels are still lower compared to the national averages for student loans, where 14.3% of debts went unpaid this year, the highest since records began in 2000.
The economic uncertainty is compounded by the end of federal student loan repayment pauses, which has disproportionately affected many Californians. The average student debt in California is $4,710 per person – significantly lower than the national average of $5,540.
As California consumers navigate these challenging financial waters, experts urge vigilance. The state must adapt to these shifting economic realities or risk deeper financial distress. What happens next? Analysts are closely monitoring trends in consumer confidence and spending as the holiday season approaches.
Stay tuned for more updates as this situation develops.
