Rising costs and high-interest rates have proven to be an increased challenge for many consumers, who in turn, rely heavily on credit products to stay afloat. However, recent analysis by TransUnion (NYSE: TRU), a leading global information and insights company, suggests that the growth in credit balance might not be as extensive as perceived.
Contrary to the fast-rising balances, TransUnion’s findings reveal that the inflation-adjusted debt growth has been substantially smaller over the past five years. Adjusting overall debt trends for inflation brings forward a different picture, one that is considerably less distressing than what raw numbers suggest.
The study seeks to uncover the real extent of reliance on credit products by American consumers and the overall trajectory of inflation-adjusted credit balance growth. TransUnion’s comprehensive analysis is focused on a variety of credit products such as auto loans, credit cards, and personal loans, among others.
According to the analysis, inflation has consistently grown over the past five years, beating the growth of debt balances on some major categories of credit products. In particular, the study indicated that an average annual increase of 2.5% on overall debt balances is less staggering when viewed alongside inflation figures. Realistically, the inflation-adjusted debt growth has only been up by a marginal 0.2% per year from Q1 2016 to Q1 2021.
By conveying a clearer image of debt growth and inflation correlation, TransUnion‘s findings provide valuable insights for both consumers and investors. The study presents a less alarming reality indicating healthier consumer borrowing behaviour than the raw data tends to suggest.
In conclusion, TransUnion’s inflation-adjusted debt growth study unveils a less daunting perspective on credit imbalance, suggesting a more sustainable borrowing behavior on the part of consumers. This analysis assists investors and consumers alike in better understanding the prevailing credit situation and paves the way for more informed decisions on credit use and investing.
