Reproduced from New York Fed Consumer Credit Panel; Chart: Axios Visuals

Americans cut back on credit cards and increased savings during the worst three-month economic period in U.S. history, as household debt fell for the first time in six years, data from the New York Fed showed.

By the numbers: Total debt declined 0.2% to $14.27 trillion in the second quarter, led by a $76 billion drop in outstanding credit-card balances.

  • Mortgage borrowing rose by $63 billion in the quarter to $9.78 trillion. Almost 70% of mortgage originations were among borrowers with a credit score of at least 760, the highest percentage since record keeping began in 2003.

Between the lines: The number of borrowers in distress fell significantly in the second quarter, but that was largely due to government relief efforts, including $1,200 one-time payments, enhanced unemployment benefits and loan forbearance programs included in the $2.2 trillion CARES Act.

  • The serious delinquency rate on consumer debt fell by half between the end of March and the end of July, to 0.7%, data from Equifax show.

What they're saying: “Protections afforded to American consumers through the CARES Act have prevented large scale delinquency,” said Joelle Scally, senior data analyst at the New York Fed.

  • “However, these temporary relief measures may also mask the very real financial challenges that Americans may be experiencing.”

Of note: The largest decrease in delinquencies of at least 90 days was in student loan debt, which was paused by the CARES Act. It fell to 7% compared with almost 11% in the first quarter.

  • Delinquencies of at least 90 days on credit cards, which were not paused by the CARES Act, rose to nearly 10%, the highest level since the second quarter of 2013.

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The stock market's not-enough tantrum

Illustration: Eniola Odetunde/Axios

The market looks like it may be throwing another tantrum, investors say. But the cause is different this time around.

What's happening: This selloff is beginning to look like the 2013 taper tantrum, which roiled markets as U.S. government yields rose in response to an expected reduction of the Fed's quantitative easing (QE) program.

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Sep 24, 2020 - Economy & Business

Investors aren't convinced the Fed can raise inflation

Expand chart
Data: St. Louis Fed; Chart: Axios Visuals

Members of the Fed, including chair Jerome Powell, have spent nearly a month talking about the central bank's shift to average inflation targeting in an effort to boost U.S. inflation and it has fallen on deaf ears.

Driving the news: A survey from the Cleveland Fed found that "despite extensive coverage in the news media, Powell’s speech apparently did not reach or register with the vast majority of the population."

House Democrats prepare new $2.4 trillion COVID-19 relief package

Speaker of the House Nancy Pelosi. Photo: Liz Lynch/Getty Images

House Democrats are preparing a slimmed-down coronavirus relief proposal focused on unemployment and direct payments that would cost roughly $2.4 trillion.

Why it matters: Democrats and Republicans have been deadlocked in negotiations for more aid despite CARES Act funds expiring over the summer.