What do the most creditworthy consumers and least creditworthy consumers have in common? They are the only credit tiers where unsecured personal credit originations did not decline from 2021 to 2025.
The polarizing trend in credit card originations reflects a widening gap among consumers as the well-to-do account for a rising share of total consumer spending activity. A new report from dv01, a loan-level data analytics platform owned by Fitch Solutions, shows how the share of credit card spending is concentrated among higher-income borrowers.
Before the Great Recession, super-prime borrowers — those with credit scores roughly between 780 to 850 — comprised 70% of total credit card spending. That share climbed to 75% from 2010 to 2022, then 83% during the past two years. A general increase in average FICO credit scores over the past decade does not explain the recent surge in super-prime borrowers, dv01 reports, even with average FICOs drifting lower recently.
“Instead, this trend reaffirms our long-term thesis,” the report concludes, “corroborated by the Fed’s DFA and consumer report data — that post-COVID consumer credit has overwhelmingly occurred among higher-income borrowers, which has strong correlation with higher credit scores.” The Distributional Financial Accounts (DFA) provide quarterly estimates of the distribution of a comprehensive measure of U.S. household wealth.
According to ratings agency Moody’s Analytics, the top 10% of earners accounted for nearly 50% of total consumer spending in the second quarter. Mark Zandi, chief economist at Moody’s, recently published a chart on LinkedIn revealing new second quarter figures showing how the bottom 80% of earners’ spending has simply kept up with inflation.
“The 20% of households that make more have done much better, and those in the top 3.3% of the distribution have done much, much, much better,” wrote Zandi, who also derived his insights from DFA. “As long as they keep spending, the economy should avoid recession, but if they turn more cautious, for whatever reason, the economy has a big problem.”
The extent of the problem — or how that problem might manifest — remains debated by economists. Generally speaking, a pullback in the high-earner spending now propping up the economy could contribute to higher inflation, rising unemployment rates, or both.
Either outcome would complicate future Federal Reserve decision-making concerning additional rate cuts, given that the central bank’s dual mandate to maintain stable prices and maximize employment is already in tension.
In August, the Bureau of Labor Statistics (BLS) drastically revised May and June’s payroll growth figures by 258,000 jobs — the largest downward revision since 1968. Additionally, the unemployment rate ticked up to 4.3% in August, a Labor Department report published Sept. 3 showed the number of unemployed workers exceeding job openings for the first time since 2021, and fresh BLS data has indicated job creation was weaker in 2024 than previously reported.
August retail sales figures published last week by the U.S. Department of Commerce showed a 0.6% annual increase in consumer spending, matching July’s 0.6% rise. Retail sales rose 0.9% in June after back-to-back months of spending declines in April and May.
At last week’s Federal Reserve meeting, policymakers elected to lower the Fed’s overnight borrowing rate by 25 basis points. Following the meeting, a reporter asked Fed Chairman Jerome Powell if high-income earners’ increasing share of consumer spending revealed risky fault lines running through an otherwise solid economy.
“The consumer spending numbers were well above expectations and that may well be skewed toward higher-earning consumers — there’s a lot of anecdotal evidence to suggest that,” Powell responded. “Nonetheless, it’s spending.”
