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Key Takeaways

  • More than 14% of people said they were worried about missing a debt payment over the next three months, the most in more than four years, a New York Federal Reserve survey showed.
  • The rise came as more middle-aged and high-earning respondents said that they are more worried about making debt payments.
  • Consumers are expected to keep shopping, as retailers today projected that spending will continue to grow this upcoming holiday season.

The number of people worried they will miss a debt payment in September rose to its highest levels in more than four years, though economists don’t expect consumers to slow their spending. 

A monthly consumer survey from the New York Federal Reserve showed that more than 14% of people believed they could miss a debt payment within the next three months, the most to deliver that answer since April 2020.

The starkest increases in debt worries came from respondents between ages 40 and 60 and those earning more than $100,000 a year, the survey showed.

Credit Troubles Not Expected to Slow Down Spending

The data comes as some economists and lenders have raised worries over consumers’ debt levels. In the New York Fed’s most recent quarterly report on household debt, more than 10% of credit card accounts were delinquent by more than 90 days, the highest levels since 2012. The same report also showed almost 5% of borrowers were behind on their auto loans.

Lenders have been noticing consumers’ struggles, with Ally Financial  (ALLY) recently warning that its auto loan business was struggling as people were having trouble paying bills. Borrowing costs have been an issue for consumers, as the Federal Reserve held interest rates at decades-high levels for more than a year before lowering rates in September. 

Despite pressure from elevated inflation and interest rates, consumers have continued to spend, with retail sales continuing to perform better than economist expectations. That trend is expected to continue through the holiday season, with the National Retail Federation projecting an increase of between 2.5% and 3.5% in holiday sales this year.

“Concerns about the amount of credit are valid, but really not considered at a critical level at this time,” said NRF Chief Economist Jack Kleinhenz. “Yes, there has been a share of credit card debt transitioning into delinquency, but still, they remain relatively small.”

Read the original article on Investopedia.