Household debt hits nosebleed high
Delinquency rates have been creeping higher for certain loans in a sign some Americans are under growing financial stress as the total debt held by US households continues to hit new highs.
The Federal Reserve Bank of New York said Tuesday that household debt totaled $12.955 trillion last quarter, up 0.9 percent from the spring for a 13th straight quarterly increase and the most on record, though the figure wasn’t adjusted for inflation or population growth.
As a share of US economic output, household debt was about 66 percent last quarter versus a high of around 87 percent in early 2009.
“Overall, the picture looks healthier than it did a decade ago,” said Adam Slater, lead economist at Oxford Economics.
Broad growth in borrowing over the summer months was the latest sign of consumer confidence as the US economy enjoys the lowest unemployment rate in nearly 17 years.
One continued concern, though, is the sharp rise in delinquency for auto loans made to subprime borrowers by auto-finance companies, usually through automakers or dealers. The New York Fed said the low overall delinquency figure masks significant deterioration in those loans over the past few years.
The smaller number of subprime auto loans made by banks and credit unions have fared better.
Auto loans outstanding jumped by $23 billion, to $1.213 trillion. Automakers in September and October reported strong sales, partly because Texans, Floridians and others had to replace vehicles damaged by late-summer hurricanes.