Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Total Household Debt Hit Record $13 Trillion in 2017

  by    0   0

Passage of a GOP budget that added $300 billion in new spending has focused plenty of attention on surging federal government debt over the last week or so. But Uncle Sam isn’t the only one running up those credit cards. Everyday Americans are also piling on the debt.

Total household debt soared to a record $13 trillion dollars in 2017, according to the latest data released by the Federal Reserve Bank of New York’s Center for Microeconomic Data.

Total household debt increased by $193 billion to $13.15 trillion in the fourth quarter of 2017. The report marked the fifth consecutive year of positive annual household debt growth. American indebtedness has eclipsed levels seen on the eve of the Great Recession.

Household debt rose in every category in Q4 2017.

Americans are burning up those credit cards. Revolving debt grew by $26 billion in the fourth quarter alone, a 3.2% increase. Americans have run up an $834 billion credit card tab. Meanwhile, flows into serious delinquency have increased steadily since the third quarter of 2016.

Mortgage debt grew by $139 billion, a 1.6% increase. Housing loans make up the largest portion of American household debt. As the debt grows, the creditworthiness of borrowers is dropping. The median credit score for those taking out new mortgages decreased slightly in Q4 2017.

Auto loan balances continued a steady rise that started in 2011. Currently, Americans owe $1.22 trillion on vehicle loans. Last year saw the highest annual auto loan origination volume ever observed in the New York Fed data. As of Dec. 31, 2017, 4.1% of auto loan balances were 90 or more days delinquent.

Student loan debt stands at a staggering $1.38 trillion. Outstanding student loan balances increased by 1.5% in Q4 2017 and delinquency levels remain high. About 11% of aggregate student loan debt was 90+ days delinquent or in default in the last quarter of 2017. As we reported last year, student loan debt is one of the biggest factors driving a growing trend of millennials struggling to transition into adulthood.

Growing debt level should come as no surprise. The Federal Reserve has held interest rates unnaturally low for nearly a decade. This has pumped up what US Global Investors CEO Frank Holmes called “the mother of all bubbles.”

The skyrocketing levels of debt also tell us something about the “economic recovery” since the 2008 financial crisis. It is essentially a fake recovery built on debt. This is not just an American phenomenon. As we reported last month, global debt is growing three times faster than global wealth.

Net wealth = Assets – Debt

So, you really can’t talk about wealth without talking about debt. While it may appear the economy is growing and Americans are getting wealthier because they have more stuff, it’s an illusion. Debt is holding everything up and that is not a firm foundation.

Increasing debt levels will likely temper future spending and could put a significant drag on the economy. This will become especially acute if the Federal Reserve continues pushing interest rates up. Rising rates will increase payments on outstanding debt. That could be the pin that pops the debt bubble.

Last summer, Holmes warned that the debt bubble will eventually burst. There are certainly signs the pop could be imminent. He recommended investors should buy gold and called the yellow metal’s long-term investment case “bright.” He said if and when the mother of all bubbles pops, it could potentially spell trouble for the investor who hasn’t adequately prepared with some allocation in a safe haven.

Another crisis could be in the works. Savvy investors and savers might very well see this as a sign to allocate a part of their portfolios in ‘safe haven’ assets that have historically held their value in times of economic contraction. Gold is one such asset that’s been a good store of value in such times.”

Get Peter Schiff’s latest gold market analysis – click here for a free subscription to his exclusive monthly Gold Videocast.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

Peter Schiff: Who’s Going to Pay for the Green New Deal? Because You Can’t Print Wealth

In his most recent podcast, Peter Schiff dug into the politics behind the Green New Deal and specifically asked a key question: who is going to pay for all this? Related

READ MORE →

A Record Number of Americans Are Delinquent on Their Car Payments

a check engine light is onA record number of Americans have fallen behind on their car payments. On Tuesday, the New York Federal Reserve released its Household Debt and Credit report covering the fourth quarter of 2018. Not only has indebtedness hit record highs, eclipsing levels seen on the eve of the Great Recession, but Americans are also having a […]

READ MORE →

US Household Debt Breaks Another Record

The national debt has pushed above the $22 trillion mark, but it’s not just Uncle Sam borrowing himself into oblivion. US household debt climbed to a record $13.54 trillion in the fourth quarter of 2018, according to a report released by the Federal Reserve Bank of New York. Total household debt (including mortgages) now stands $869 billion […]

READ MORE →

National Debt Tops $22 Trillion

The national debt has pushed beyond the $22 trillion mark. According to Treasury Department data released Tuesday, the national debt now stands at $22.01 trillion. When President Trump took office in January 2017, the debt was at $19.95 trillion. That’s a $2.06 trillion increase in the debt in just over two years.  Related

READ MORE →

The US Government Has Spent Itself Inbetween a Rock and a Hard Place

As we pointed out in an article last week, the US federal government has added $1.5 trillion to the national debt over the last 12 months. As a result, the US Treasury Department is flooding the market with bonds. Meanwhile, the biggest buyers of US debt – China, Japan and the Federal Reserve – are […]

READ MORE →

Comments are closed.

Call Now