Household Debt Reaches $14.15 trillion

As of February 11, for the 22nd consecutive quarter, debt has reached a new high. According to The Federal Reserve Bank of New York’s Quarterly Report the “total household debt increased by $193 billion, or 1.4 percent, to reach $14.15 trillion in the fourth quarter of 2019. This makes the total household debt $1.5 trillion higher...than the pre-recession peak of $12.68 trillion, set in the third quarter of 2008.”¹

Mortgages, which are a big part of household debt, increased by $120 billion in the last quarter. But comparatively, the credit quality of these mortgages look good and default on these types of loans remains at a steady low. Additionally, HELOC “saw a $6 billion decline, bringing the outstanding balance to $390 billion and continuing the 10-year downward trend.”2 Furthermore, auto loans increased by $16 billion and outstanding student loans were at $1.51 trillion, which is an increase of $10 billion from last quarter. Credit cards also saw a significant increase of 96 billion.²

However, despite the increase in household debt, aggregate delinquency rates have remained mostly the same. “As of December 31, 4.7% of outstanding debt was in some stage of delinquency, a 0.1 percentage point decrease from the third quarter.”²

Although debt is steadily on the rise, the economy is stable with the quality of loan borrowers seemingly healthy. A big part of that, one might argue, is due to the strength in employment numbers. Today, unemployment is the lowest it's been in decades.

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1 https://www.newyorkfed.org/microeconomics/hhdc

2 https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q4.pdf