Consumers Turn To Credit Cards To Battle Inflation

(KNSI) – Consumers continue to struggle under the weight of inflation, and they’re turning to credit cards to get by.

Late Friday afternoon, the Federal Reserve released its consumer credit report for June. Overall debt rose by $40.15 billion in the month, the second largest increase in history. Revolving credit, debt meant to be repaid quickly like the plastic in your wallet, was the main driver.

Expectations were for an increase of around $25 billion with the actual figure easily surpassing estimates. Revolving credit ballooned by 16 percent compared to the same time last year. In June, inflation hit a 41-year high at 9.1 percent. Wage growth was barely half that, coming in just under five percent.

Friday’s July jobs report from the Bureau of Labor Statistics showed a spike in part-time and second jobs being taken, another sign that people are getting creative to make ends meet. In the household survey, which determines the overall unemployment rate, labor force participation fell and the country lost 71,000 full-time jobs. Still, against that backdrop part-time work boomed by 384,000 jobs and 92,000 people picked up a second full-time gig.

The numbers suggest that even as certain industries like residential construction are hit hard by the slowing housing market, people are finding ways to add hours when forced to, namely to balance their checkbook.

The numbers are significantly less encouraging than the net gain of 528,000 jobs, which is derived from a survey of businesses.