US household debt reaches a worrying high. Growth on loan
US families have a debt problem: Total US consumer debt increased by $212 billion, or 1.2%, from the previous quarter, reaching a new high of $17.50 trillion in fourth quarter of 2023.
Mortgage balances increased by $112 billion and stood at $12.25 trillion at the end of December. Credit card balances, now $1.13 trillion, increased by $50 billion (or 4.6%).
Auto loan balances increased by $12 billion, continuing the growth trajectory underway since the second quarter of 2020, and now stand at $1.61 trillion. Other loan balances, which include retail credit cards and other consumer loans, grew by $25 billion. Student loan balances remained virtually unchanged, up $2 billion and sitting at $1.6 trillion.
In total, non-real estate balances grew by $89 billion. Delinquency rates and the transition to distressed status have both increased, despite the increase in debt. About 3.1% of outstanding debt was in some stage of delinquency, up 0.1 percentage points from the third quarter, but still 1.6 percentage points less than the final quarter of 2019.
If we see this second graph with a horizon of 25 years we understand the particularity of the current situation:
This strong private debt is accompanied by record public debt both in nominal value:
Both in relation to the GDP of the USA
The problems that this situation shows are the following:
- first of all we have an increase in outstanding debts which are, for now, still low, but in the future an increase in these values can cause problems, especially considering that these are figures subsequently financialised;
- secondly, such a high public debt, with decreasing inflation, means that, in the event of a crisis, it is much more difficult to see an intervention of help from the state. The FED will need to intervene.
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The article US household debt reaches a worrying high. A loan growth comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-debito-delle-famiglie-usa-giunge-a-un-preoccupante-massimo-una-crescita-a-prestito/ on Wed, 07 Feb 2024 07:00:41 +0000.