Americans have racked up a trillion dollars in credit card debt. That’s actually OK

Credit card balances soared past a trillion in 2023, reaching a record high in the final months of last year, according to government data. It stands to reason that Americans should eventually cut back to service that mountain of debt, meaning less spending on goods and services — and less revenue for companies to pay their employees. But some economists aren’t alarmed if those debt figures are put into much needed context.

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link. Americans racked up a record amount of credit card debt in 2023, soaring past a trillion dollars. But a mass retrenching in consumer spending — the main driver of the US economy — is unlikely this year, according to economists. Workers are still commanding robust wage gains, the stock market is on solid footing, attitudes toward the economy have improved dramatically in recent months, and consumers spent at a healthy clip during the holidays. Card debt has indeed surged in nominal terms, but after adjusting for inflation, it’s nearly 20% below a peak it reached in late 2008, according to a WalletHub analysis of New York Fed data. Americans also seem equipped to deal with their balances, economists say. “Consumers still have a lot of money left over to be able to spend, so the credit card data is often misinterpreted,” Russell Price, chief economist at Ameriprise Financial, told CNN. “The dollar value of credit-card debt is at an all-time high, but so is population, employment and consumer income.” Here’s what going on with credit cards: Credit card debt hit a fresh nominal high of $1.13 trillion from October through December, according to the Federal Reserve Bank of New York.