It’s inflation day.

Stocks have rallied ahead of the key April CPI reading due at 8:30 a.m. today.

Buoyed by meme-stock caffeine, an uptick in trading volumes, and a hot-but-not-terrible result for April PPI data, the S&P 500 closed Tuesday’s session within spitting distance of a record.

The Nasdaq, meanwhile, closed at a new high.

Credit debt hovers near Great Recession levels

Uncle Sam isn’t the only one dealing with troubling levels of rising debt.

The wave is hitting everyday Americans, too. 

A growing share of consumers are falling behind on payments as they increasingly rely on credit cards and face the bite of inflation.

New York Fed data showed total household debt increased by $184 billion in the first quarter of the year. 

That 1.1% rise from the end of 2023 brings the total amount to $17.69 trillion.

Policymakers, meanwhile, continues to talk up the strength of the economy. Over recent months, the Fed has questioned whether financial conditions are tight enough. 

Evidently, “tight enough” depends on who you ask.  

“Higher inflation has hurt lower income households and people who use most of their credit line much more than higher income and lower credit usage households,” Jessica Rabe, the co-founder of DataTrek Research, told me.

Credit-card delinquencies have now climbed above pre-pandemic levels, according to the central bank report. 

• Credit card balances overall are 13% higher compared to one year ago

• Roughly 8.9% of credit card balances moved into delinquency status in the first quarter

• About one in five Americans maxed out their credit cards in the first quarter

These levels haven’t been seen since the Great Recession, though the trend has been snowballing for some time. 

From 2021 to the end of last year, credit balances climbed nearly 50%, according to Fed data, which marks the steepest climb on record for a three-year stretch. 

That spike in usage comes at a time when interest rates have soared. 

The average credit card annual percentage rate is hovering near a record at 20.66%, per Bankrate.

And while inflation has declined since its peak of 9.1% in June 2022, it’s not clear when it will fall back to the Fed’s 2% target. 

Those sticky, high prices in turn have put pressure on a huge number of US households. 

To be sure, much of this consumer pain has indeed been masked by broader economic strength, which has been supported by consumers who aren’t living paycheck to paycheck. 

This big-picture take seems to be what the Fed is most focused on.

“The offset from a macro perspective,” Rabe said, “[is that] wealthier households spend far more and they are still doing relatively well financially.”

*At a glance:

Elsewhere:

• The return of meme stocks didn’t happen overnight. It was actually weeks in the making. Trading volumes have surged for no good reason well before Roaring Kitty tweeted this week to immense fanfare. As one trader put it, “something has been percolating.” (Sherwood)

• Joe Biden vs. China. It’s a delicate balance, but the White House wants to protect US interests without jacking up consumer prices for electric cars. On Tuesday, Biden moved forward with a set of sweeping tariffs on Chinese imports for semiconductors, EVs, and batteries. (WSJ)

• Jerome Powell still sees higher for longer. In a panel Tuesday, the Fed chief said he’s now less confident that inflation is moving in the right direction. He reiterated his call for “patience” with restrictive policy, though he still doesn’t anticipate hiking interest rates. (Bloomberg)

Rapid-fire:

• Biden moved ahead with $1 billion in new arms for Israel (WSJ)

• BlackRock has nearly taken the throne as the world’s largest bitcoin fund (FT)

• OpenAI’s co-founder Ilya Sutskever is leaving the company (WSJ)

• Google just unveiled powerful AI-enhanced features (Business Insider)

• Crypto may influence the November election (CoinDesk)

• Vanguard will tap a former BlackRock executive as its new CEO (WSJ)

Last thing:

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