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

Untangling Bitcoin and Blockchain

bitcoin transactionsBitcoin and the blockchain are joined at the hip – so much so that a lot of people don’t distinguish between the two. Cryptocurrency and blockchain have almost become synonymous. But in fact, they are two different things, and it’s important to understand the distinction. The blockchain is a technology. Cryptocurrency is a medium of […]

READ MORE →

Jim Rickards: Junk Bonds Could Set off the Next Crisis

Last month, we reported on troubling signs in the corporate bond market. According to Moody’s, the majority of US companies have a “speculative” credit rating. They are considered high risk. As a result, their debt is “high yield” or “junk. When you combine leveraged loans and junk bonds, the total level of “junk” debt in the […]

READ MORE →

Three Reasons Gold Will Rise from Its Slumber

The price of gold has languished in recent weeks. After falling below $1,300 in May, the yellow metal has hit 2018 lows this month. Dollar strength along with the anticipation of further Federal Reserve rate hikes have bolstered the dollar and weighed on gold. Peter Schiff has been saying this dollar strength is merely an upward […]

READ MORE →

Which Countries Produce the Most Gold?

Global mine production fell slightly in 2017, the first drop in mine output since 2008. In fact, gold production has generally increased every year since the 1970s. The drop in 2008 was something of an anomaly, as it occurred at the onset of the 2008 financial crisis. The recent slowdown in mine production is more […]

READ MORE →

IRS Building Walls to Keep Americans In

There has been a tremendous amount of debate about building walls to stop illegal immigration. But the IRS is building walls to keep Americans in. The US government is cracking down on Americans with outstanding tax bills by revoking passports. 

READ MORE →

Comments are closed.

Call Now