Liquid assets accumulated during the low-spending COVID era are “running dry” according to researcher at the San Francisco Federl Reserve, as consumer spending remained resilient despite higher interest rates. This holds especially true for low and middle income households which now have credit card delinquency rates 3% above pre-pandemic levels.
Meanwhile higher income households which have a larger percentage of their wealth in financial assets.
“The recent drawdown in liquid assets has coincided with an increase in household debt, which has been steadily increasing over the past few years—and recently reached all-time highs,” noted researchers Hamza Abdelrahman, Luiz Oliveira and Adam Shapiro.
The moment of depletion of extra liquid assets related to COVID occurred more rapidly with low and middle income assets than high income houselolds, according to the researchers, who noted that the return to pre-pandemic credit card delinquency rates occurred in 2Q22 for higher income houshold and in Q421 for lower income households.
Menwhile higher income households saw their wealth rise overall due to greater investment in mony markets, which rose significantly since the pandemic.
By Staff
