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Demand for new credit in the U.S. over the last year has declined and will likely stay soft in the future, according to a survey released yesterday by the New York Federal Reserve, Reuters reported. There was a "notable" decline in credit over the last year, with application rates at 41.2%, compared to 44.8% in 2022 and the pre-pandemic 2019 level of 45.8%, the regional Fed bank's quarterly Survey of Consumer Expectations Credit Access survey showed. But even as the overall application rate for new credit declined among those surveyed, interest in applying for more credit card debt rose. The survey said that reading had hit 29% as of October and was 26% for 2023, compared to a 27.2% credit card application rate in 2019. Over the next year, the proportion of people in the survey who plan to apply for more credit ebbed to 25.1% in October and 25.9% for the year as a whole. Last year, the proportion of those who planned to apply for new credit stood at 26.7%. The report noted that expected decline in applications for credit extended to new credit cards, auto loans, mortgages and home refinancing. Respondents also see "significantly higher" prospects of future credit applications being turned down.

Consumers spent less at stores, dealerships and gas stations last month, a sign the summer spending boom is cooling heading into the holiday shopping season, the Wall Street Journal reported. U.S. retail sales fell 0.1% in October from a month earlier. That is the first decline since March and comes after a 0.9% increase in September. Declining retail sales, combined with slower hiring and easing inflation indicate that the economy is cooling after surprisingly strong growth much of this year. Americans spent less at auto dealerships as higher interest rates could deter some from making big-ticket purchases. Gasoline purchases also fell, as declining prices at the pump resulted in less spending at gas stations. Sales also declined at department, hardware and furniture stores. Consumers continued to spend more at restaurants and bars, with sales rising 0.3%, and at grocery stores and online.

When the Supreme Court struck down President Biden’s $400 billion plan to forgive up to $20,000 in federal student loan debt for 43 million borrowers, the prospect of substantive debt relief appeared to vanish. But then millions of borrowers received surprise notices that their federal student loans were being eliminated through other government relief programs, the New York Times reported. The Biden administration has wiped out loans totaling $127 billion for 3.6 million borrowers — the biggest wave of student debt cancellation since the government began backing educational loans more than 60 years ago. The cost of that relief is ultimately borne by taxpayers. The Education Department is the largest lender for Americans who borrow for higher education, and 43 million borrowers currently owe the government $1.6 trillion. The government profits from the interest that borrowers pay, but loan defaults and canceled debts offset that. The system is projected to run at a loss in most years. Many of the programs that the Biden administration is using have existed for years, sometimes decades, but were notoriously troubled, forcing borrowers to navigate complicated bureaucratic hurdles. By adjusting rules and temporarily waiving some requirements, Education Department officials have accelerated long-delayed relief.