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

US Household Debt Breaks Another Record

  by    0   0

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 higher than the previous peak of $12.68 trillion in the third quarter of 2008 (right before the crash) and 21.4% above the post-financial-crisis trough reached in the second quarter of 2013.

Non-mortgage debt increased by $58 billion in the fourth quarter, with auto loans increasing by $9 billion, credit card balances going up by $26 billion, and student loan balances climbing by another $15 billion.

Not only are Americans saddled by more debt, they’re having an increasingly hard time making payments. For instance, the New York Fed said performance in the auto loan sector is “slowly worsening.”

Growing delinquencies among subprime borrowers are responsible for this deteriorating performance, and younger borrowers are struggling most acutely to afford their auto loans.”

Flows into serious delinquency for credit cards rose 5% in Q4, up from 4.8% in the third quarter.

Outstanding student loan debt stood at $1.46 trillion in the fourth quarter. A whopping 11.4% of aggregate student debt was 90+ days delinquent or in default in 2018 Q4. That represented a small improvement from the jump seen in the third quarter of 2018.

There were also some signs in the report that the US economy might be slowing down.

The number of credit inquiries within the past six months – an indicator of consumer credit demand – declined to the lowest level
seen in the history of the data. Meanwhile, account closings were at their highest level since 2010.

It’s pretty clear that the recent GDP growth has been driven by borrowing. The drop in demand for more credit could be a sign that American consumers are tapped out. This is not good news for an economy built on consumer spending.

There were also troubling signals in the housing market. We’ve been reporting on signs that the air is coming out of housing bubble. 2.0. The New York Fed provided yet another. Mortgage debt slipped for the first time in two years. Mortgage originations dropped by $44 billion.

One thing is clear – the Fed has managed to once again blow up a bubble economy built on a foundation debt. It did it with nearly a decade of easy money. But there are obvious cracks in that foundation. The question is how long can the whole thing hold together?

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

Subprime Credit Card Charge-Offs Remain at Great Recession-Era Levels Despite “Booming” Economy

Last week we highlighted the rising level of auto loan delinquencies and the growing number of student loan borrowers who can’t make their payments. This week, we got some more bad news for lenders. Subprime credit card charge-offs remain at levels reminiscent of the Great Recession. In the first quarter of this year, credit card […]

READ MORE →

Texas Takes Another Step to Facilitate the Use of Its Gold Bullion Depository

Texas continues to take steps to make the state more friendly to gold and silver. Earlier this week, the Texas Senate gave final approval to a pair of bills that that would exempt precious metals stored in the Texas Bullion Depository from certain taxes. By repealing taxes on gold and silver, the state will treat […]

READ MORE →

Nope! Nothing to See Here!

Don’t worry. Nothing to see here! That was pretty much the message Federal Reserve Chairman Jerome Powell delivered in a speech he gave at the Atlanta Federal Reserve bank conference on May 20. Powell talked about the high levels of corporate debt. In fact, corporate leverage is at a record level of around 35% of […]

READ MORE →

China Sells Most US Treasuries in 2-1/2 Years Amid Threats of ‘Nuclear Option’

China sold off the highest level of US Treasurys in nearly 2-1/2 years in March. Meanwhile, there are renewed fears the Chinese could implement its “nuclear options” and sell off even more US debt in retaliation for US trade war tariffs. China sold $20.45 billion in Treasuries in March. That was the biggest US debt […]

READ MORE →

Auto Loan Delinquencies Approaching Great Recession Peak

a check engine light is onAuto loan delinquencies have surged to the highest level since 2011 and are approaching levels seen at their peak during the Great Recession. The percentage of outstanding auto loans in serious delinquency (90 days or more past due) jumped to 4.69% in the first quarter of 2019, according to the latest data from the New […]

READ MORE →

Comments are closed.

Call Now