Did I hear someone say Black Friday? 

We shop, we shop, and before we stop, we pull out our wallets to pay, and many of us do that with a plastic card of one kind or another.  

More and more often these days, that purchase is put on a credit card that doesn’t get paid off at the end of the month. During the pandemic, many consumers, awash in relief payments, improved their balance sheets.  

But we’re now spending on more stuff again. Meanwhile, prices have soared, and consumer debt levels are rising again. That raises some risks for holiday spending, and the wider economy, going forward. 

Americans’ credit card balances are up 15% from a year ago, according to the Federal Reserve Bank of New York. It’s the biggest increase in more than 20 years. Consumer debt’s now higher than before the pandemic, and loan delinquencies are on the rise.

“Consumers are getting a bit over their skis at this point, from a consumer credit perspective,” said Sam Stovall, chief investment strategist at CFRA Research. 

He said a key economic warning sign is when debt rises to more than 20% of personal income. We’re now above 25%.  

“Such an elevated debt-to-income ratio in the face of high inflation and a softening economy, I think will make it hard for consumers to maintain, let alone raise, this level of spending.”

As inflation bites, consumers are shifting what they’re spending on, said Sheryl Kingstone at S&P Global Market Intelligence. 

“A lot of it is necessities. Spending is now going to what we call nondiscretionary,” she said, meaning more on groceries, utilities and rent and less on presents and going out during the holidays. 

And some consumers who are strapped for cash are running down their savings and racking up debt even to afford the basics, said Robert Frick at Navy Federal Credit Union.

“Unfortunately, most lower-income people have paid their savings down completely,” he said. “And there’s still $1.5 trillion in excess savings. But that’s kind of sequestered among higher-income people.”

As consumer debt rises, so does the cost of paying it back because interest rates are rising too.

So far, though, consumers are generally still in OK shape. That’s for one key reason, said former Fed economist Claudia Sahm: “The job market is really good.”

But if unemployment rises, she said, and consumers are caught with high debt and no income, that could spell economic trouble to come.