Credit card spending slows as Americans face maxed-out credit and rising bankruptcies.

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A troubling trend is emerging in the world of consumer finance. Credit card spending, once a major driver of economic growth, is now showing signs of slowing down. Recent data from the Federal Reserve’s consumer credit report reveals that revolving debt—mostly credit card balances—fell by 1.2% in August. This drop suggests that Americans may have maxed out their credit or, more alarmingly, filed for bankruptcy. With credit lines stretched thin, there’s little room for further borrowing.

As credit card debt hits a fresh high, the implication is clear: spending will continue to slow. Consumers who once fueled the economy with credit are now burdened by record-high balances, facing an increasingly tight financial situation. This sharp slowdown in consumer spending is a significant concern for economic growth. Just look at the Atlanta Fed’s GDPNow model, which revised its Q3 GDP growth forecast upward to 3.4% from 3.2% in early October, driven by increased consumer spending. But as credit card balances swell and spending slows, those optimistic forecasts are likely to plummet.

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The hard truth is that once the spending slowdown fully materializes, economic growth could grind to a halt. For every dollar spent on credit, there’s a growing pile of debt waiting to be repaid—and that debt is taking its toll on the broader economy.

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