The US consumer-spending-driven economy keeps churning along, with analysts and the Trump administration touting its health without a care in the world. But new data from the New York Federal Reserve reveal some disconcerting realities that lurk underneath recent economic performance.
Aggregate household debt balances increased for the 16th consecutive quarter from April through June, and now total US$618 billion more than the previous peak in 2008. Total household debt is almost 20% higher than the post-economic-crisis low seen in the second quarter of 2013.
Despite the rising total debt, delinquency rates improved modestly in the second quarter.
“While overall delinquency rates have remained stable at relatively low levels, transition rates into delinquency have fallen noticeably for student loans over the past year, reflecting an improved labor market and increased participation in various income-driven repayment plans,” Wilbert van der Klaauw, senior vice-president at the New York Federal Reserve, said in a statement.
A breakdown in the ballooning debt:
- Auto loans were up US$48 billion year over year
- Credit card loans jumped by US$45 billion versus a year ago
- Student loans were up US$61 billion from the previous year to US$1.41 trillion