House­hold debt hits nose­bleed high

New York Post - - BUSINESS - By BEN LEUBSDORF

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.

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