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Credit card balances hit a fresh nominal high of $1.13 trillion in the October-through-December period, according to the New York Fed, the third consecutive quarter that figure stood above a trillion.

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.

Washington, DC CNN  — 

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.

The issue with those figures is that they don’t factor in that about 55% of borrowers repay their balances in full each month, Price said. New York Fed staff noted that limitation of the data in a blog post.

According to a LendingTree analysis of more than 350,000 credit reports, the average unpaid credit card balance was $6,864 in the fourth quarter.

Overall, US household debt (including credit card balances) rose to a new high of $17.5 trillion in the fourth quarter, up 1.2% from the prior three-month period.

Consider the broader picture: The US job market remains solid and wage growth is beating inflation.

Employers added a robust 353,000 jobs in January as the unemployment rate held steady at 3.7%. US job openings have gradually come down since peaking at 12 million in March 2022, but they remain well above pre-pandemic levels, and layoffs haven’t picked up in any meaningful way.

The job market’s continued strength means Americans can still pay down their debts, put money away into savings and continue to spend.

“While credit growth has accelerated, debt servicing costs have risen and new delinquency rates have increased, the broad US credit picture is not alarming,” Gregory Daco, chief economist at EY-Parthenon, said in a note Friday.

Soaring US stocks, driven by investments in companies linked to generative artificial intelligence, have also beefed up Americans’ 401(k)s.

Credit is also key to powering spending, especially when it comes to big-ticket items such as furniture and appliances. As the economy grows, so does debt.

“Our economy naturally grows because of a combination of productivity growth and population growth, so something has to really disrupt growth to make household balance sheets contract,” Lara Rhame, chief US economist at FS Investments, told CNN.

For example, while household debt began to shrink in the aftermath of the global financial crisis in 2008, those debt levels began to rise again in 2013 and have been on a mostly upward trajectory ever since, according to New York Fed data.

But there’s still economic pain: Inflation, which remains above the Federal Reserve’s 2% target, is still pinching Americans. Even though it has slowed markedly over the past few years, prices remain much higher than anything consumers and businesses had ever dealt with in pre-pandemic times.

And as inflation slows, prices themselves won’t decline, they’ll just rise less quickly. A broad drop in prices would be distressing as it would likely be precipitated by a severe recession.

Americans are also dealing with painfully low housing affordability and the highest interest rates in 23 years, which affects borrowing costs on everything from car loans to mortgages.

So, while there certainly isn’t a shortage of economic hurdles bedeviling people’s budget — and credit card debt has surged — the big picture indicates that, so far, Americans (and their economy) remain healthy.

Nvidia names Huawei a top competitor in major areas including AI chips

Nvidia has named Huawei a top competitor in a number of areas, including in the crucial production of processors that power artificial intelligence (AI) systems, my colleague Laura He reports.

The Santa Clara-based company said Wednesday in its annual report that Huawei was a competitor in four out of five major categories of its business, including supplying software and hardware for graphic processing units (GPUs), which are widely used in generative AI.

Other companies also listed as its rivals in some areas include AMD (AMD), Amazon (AMZN), Microsoft (MSFT) and Broadcom (AVGO).

The naming of Huawei came just two months after Jensen Huang, chief executive officer of Nvidia (NVDA), told reporters in Singapore that the Chinese tech giant was a “formidable” competitor in producing AI chips, according to a Reuters report.

The Shenzhen-based firm, which makes smartphones and telecoms equipment, surprised the world last year by launching the Mate 60 Pro, a cutting-edge phone powered by advanced chips.

Questions swirled over how Huawei was able to manufacture the phone when it had spent the four years under US restrictions banning its access to 5G technology.
The breakthrough represented a “milestone” achievement for China, according to analysts, as Beijing and Washington are locked in a battle over semiconductor technology.

Read more here.

Up Next

Monday: Earnings from Workday, Zoom and Domino’s Pizza. The US Commerce Department reports new-home sales in January. European Central Bank President Christine Lagarde delivers remarks.

Tuesday: Earnings from Lowe’s, AutoZone, eBay, the JM Smucker Company, CAVA Group, Macy’s, Urban Outfitters, VIZIO, Bumble, Compass, Eventbrite, Redfin, Virgin Galactic and Beyond Meat. The US Commerce Department releases January figures on new orders for durable goods. S&P Global releases its S&P CoreLogic Case-Shiller 20-city home price index for December. Fed Vice Chair for Supervision Michael Barr delivers remarks. The Conference Board releases its February consumer survey.

Wednesday: Earnings from Salesforce, TJX Companies, Monster Beverage, Baidu, HP, Okta, Paramount Global and Duolingo. The US Commerce Department releases its second estimate of fourth-quarter gross domestic product. Fed officials Raphael Bostic, Susan Collins and John Williams deliver remarks.

Thursday: Earnings from Anheuser-Busch Inbev, Dell Technologies, Dollar Tree, Best Buy, Birkenstock, GoodRx, Papa John’s International and Sweetgreen. The US Commerce Department releases January figures on household spending, income and the Fed’s preferred inflation gauge. The US Labor Department reports the number of new applications for jobless benefits in the week ended February 24. The National Association of Realtors reports January home sales based on contract signings. Fed officials Raphael Bostic, Austan Goolsbee, Loretta Mester and John Williams deliver remarks. S&P Global and China’s National Bureau of Statistics release February surveys gauging economic activity in the country’s manufacturing sector.

Friday: Earnings from Pearson and fuboTV. The European Union’s statistics agency releases February inflation figures. S&P Global and the Institute for Supply Management release February surveys gauging economic activity in the US manufacturing sector. The University of Michigan releases its final reading of consumer sentiment in February. Fed officials Christopher Waller, Raphael Bostic, Mary Daly and Adriana Kugler deliver remarks.