Total U.S. Household Debt Tops $14 Trillion

Over the past several years, as the economy has continued to grow, so has the total amount of debt that Americans have taken on. While housing may make up the bulk of this debt, car loans, credit cards, and student loan debts are also on the rise. In fact, as Bloomberg reports, total household debt in the United States has now topped $14 trillion for the first time.

The fourth quarter of the year saw household debt increase by $200 billion from the prior quarter. Totaling $14.15 trillion, that’s also up $601 billion from a year prior and $480 billion from the end of Q1. Looking even further back, the latest figure is $1.5 trillion more than Q3 2008 and marks a 26.8% increase from Q2 2013. One interesting note is that the total amount of household debt for young people ages 18 to 29 now sits at $1.04 trillion — also a new record. That’s thanks in part to mortgage loans among this group reaching their highest level since the third quarter of 2007.

Speaking of mortgages, as one might expect, the vast majority of that $14.15 trillion figure is made up of mortgages. For the fourth quarter, these totaled $9.56 trillion. That’s a quarterly increase of $120 billion and year over year rise of $440 billion. Meanwhile student loans contributed another $1.51 trillion (up $50 billion for the year) followed by $1.33 trillion in auto loans (up from $1.27 trillion at the end of 2018). Credit card debt also rose during the year, hitting $930 billion in Q4 — a year over year increase of $60 billion. Only one debt type was down for the year: home equity loan. After starting the year at $410 billion, they slid to $400 billion in Q2 2019 and landed at $390 billion at the year’s end.

In a statement regarding the latest figures, New York Fed senior vice president Wilbert Van Der Klaauw said, “Mortgage originations, including refinances, increased significantly in the final quarter of 2019, with auto loan originations also remaining at the brisk pace seen throughout the year.” Van Der Klaauw went on to note a rise in late payments as well, adding, “The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers.”

To Van Der Klaauw’s point, 90-day+ delinquencies on auto loans rose to their highest point since 2011, reaching 4.9% last quarter. Similarly credit card delinquencies returned to 8.4%, matching a level last seen in Q1 2015. However, while delinquent student loan payments have increased from Q3, the current 11.1% still marks a year over year decrease.

With the economy continuing to expand, taking out a mortgage or loan might be affordable for many Americans. The problems come when things slow, potentially leading to more late payments and delinquencies. Hopefully that’s not the case but this latest report serves as a reminder that consumers should be cautious when taking on debt.


Also published on Medium.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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