Record credit card balances, fewer trips to McDonald’s: More signs of strain ahead of the holidays

Key Points:

• Americans are entering the holiday shopping season with record credit card debt, which reached $1.29 trillion in the three months ending September, a 67% increase since early 2021, according to the Federal Reserve Bank of New York.
• Total household debt, including mortgages and loans, rose by $334 billion in Q3 to $19.1 trillion, reflecting depleted savings and increased borrowing amid a 30% rise in prices since 2019.
• Consumer spending growth is slowing, with retail sales rising only 0.2% last month and disposable personal income growth at its lowest since April, as inflation remains elevated due to factors like supply chain issues and the Iran war.
• Financial experts warn that unexpected expenses such as medical bills and home repairs are pushing many households into credit card debt, despite a relatively stable labor market with moderate job growth.
• Consumer sentiment is mixed across sectors; while casual dining remains popular as an affordable luxury, fast-food chains like McDonald’s are struggling to attract low-income customers despite promotions, highlighting ongoing budget pressures.