Americans' appetite for credit cards, auto loans, mortgages, and other credit dropped to pre-pandemic lows, and it's expected to fall further over the next 12 months, according to the Fed's most recent SCE Credit Access Survey.

“The application rate for any kind of credit over the past twelve months declined to 41.2 percent from 44.8 percent in 2022, ” the report stated. That rate is well below its pre-pandemic 2019 level of 45.8%.

The only category that saw an increase in application rates was credit limit increases for cards that consumers already had.

Meanwhile, the mortgage application rate fell by a third to 4.3% compared to a year ago—a new low since the survey first launched in 2013. That jives with data from the Mortgage Bankers Association, which said in September that mortgage demand hit its lowest point since 1996.

Americans say expenses are outpacing income

The latest SCE survey isn’t the only evidence showing that Americans can no longer afford the post-pandemic lifestyle they got used to.

A new poll by the Associated Press-NORC Center for Public Affairs Research shows household finances are beginning to weaken ahead of the holidays as incomes fail to keep up with expenses.

The Associated Press reports: “About 2 in 3 Americans say their household expenses have risen over the last year, but only about 1 in 4 say their income has increased in the same period.”

U.S. consumer spending also began to fall in October, according to the new CNBC/NRF Retail Monitor, a measure that tracks credit card transactions.

The Retail Monitor’s October print found flagging demand in electronics and furniture as retail purchases fell. Overall retail spending for the month—other than cars and fuel purchases— dropped by 0.08%.

Meanwhile, more Americans are dipping into their retirement savings to keep up with expenses.

Fidelity Investments data published on Nov. 20 revealed 2.3% of workers took a hardship withdrawal in the quarter ending Sept 30. That's up from 1.8% in 2022.

The Fed says Americans are suffering from sticker shock

In addition to the rising real cost of living, there may be a psychological reason for the falling demand for consumer credit.

In a recent speech at Duke University, Lisa Cook, a member of the Fed Board of Governors, explained that Americans are feeling sticker shock after three years of high inflation.

“Most Americans are not just looking for disinflation. They’re looking for deflation. They want these prices to be back where they were before the pandemic. […] I hear that from my family,” she said.

Concerns about inflation are also showing up in various consumer confidence indicators, which serves as a pulse on the finger of consumer spending plans.

The University of Michigan consumer sentiment index has hovered at a historic low since August and has been in decline for the last three months.

Sticker shock or not, one thing is as clear as day: Americans aren't comfortable splurging as much as they used to over the past couple of years—even with the holidays just around the corner.