TransUnion, a major consumer credit agency, disclosed its analysis on inflation-adjusted debt growth over the last five years, unveiling that consumer debt has grown modestly despite total balances increasing.
The report suggests that most consumers manage credit efficiently, with significant income gains aiding debt management, except among subprime borrowers affected by inflation’s impact on costs.
Inflation-Adjusted Debt Grows Just 3% Over Five Years
The report by TransUnion indicates modest growth in inflation-adjusted consumer debt over five years. Despite a 28% rise in nominal balances, real growth was just 3%, reflecting careful debt management.
TransUnion executives, Jason Laky and Michele Raneri, point out that rising balances are aligned with economic realities. They stress subprime consumers felt inflation hardest, yet most risk tiers show manageable credit situations.
Subprime Borrowers Struggle, Others Remain Resilient
Consumer debt insights reveal the varying impacts on different consumer segments. While nominal balances saw a spike, inflation adjustments paint a picture of caution and capability in managing debts.
The findings suggest consumers in most tiers have potential for further borrowing. Subprime tiers, however, face challenges as they deal with higher costs brought on by inflation.
Super Prime Consumers Show Strong Credit Performance
Past reports show similar debt behavior during inflationary periods, highlighting consumer resilience. Super prime consumers continue to demonstrate strong credit performance, reminiscent of prior trends.
Experts from Kanalcoin agree with TransUnion’s outlook, noting that income gains, coupled with effective debt management, led to reduced inflation-adjusted debt, aligning with historical patterns during economic upswings.
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