Credit card balances hit a record $1.29 trillion before the holidays

Credit card balances climbed $22 billion in the three months ending in September, pushing total card debt to a record $1.29 trillion, according to the Federal Reserve Bank of New York's quarterly household debt report. That's 67% above the first quarter of 2021, when pandemic restrictions kept Americans away from travel and restaurants. The timing stings: the pile-up landed just one week after affordability dominated the midterm elections.

Total household debt, spanning mortgages, student and auto loans, credit cards and home equity lines, rose by $334 billion last quarter and now sits at $19.1 trillion — $5 trillion above where it stood at the end of 2019. Federal data shows savings rates have dropped below 4% of income, under pre-pandemic levels. Ted Rossman, principal consumer finance analyst at the nonprofit Money Management International, said the past two months brought the most debt management plan sign-ups in more than 15 years, adding that budgets are reaching a breaking point.

Spending is already wobbling. A monthly gauge from CNBC and the National Retail Federation put last month's retail sales growth at 0.2%, the slowest in nearly a year, with NRF CEO Matthew Shay crediting a strong Halloween and early promotions for keeping it from being worse. Real disposable personal income grew less than 1% in September, per the St. Louis Fed — the third straight month of slowing. Inflation is the driver: consumer price growth has averaged more than 3% since March after the Iran war revived it, though oil and gas prices have eased since Democrats' midterm win.

The labor market offers the one cushion. Employment growth averaged 137,000 over the past three months, a swing from an average loss of 45,000 in the same stretch of 2025, according to the report. Nationwide chief economist Kathy Bostjancic said being employed is the core support for spending, and falling gas prices may give consumers more daylight. Still, about 2 million Americans have been jobless for six months or more as of the end of October — 27.6% of the unemployed, the highest share since December 2021.

Earnings calls paint a split-screen consumer. Kraft Heinz CEO Steve Cahillane called shoppers fragile and said the company will hold off on big price increases to meet them where they are. McDonald's reported a 0.2% drop in U.S. same-store sales for the third quarter, its first decline since early last year, with CEO Chris Kempczinski conceding the chain hasn't delivered the entry-level value low-income customers want. Reynolds CEO Scott Huckins said shoppers are chasing promotions and bigger value packs, while Bloomin' Brands CEO Michael Spanos described casual dining as still an affordable luxury for cautious diners.