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 most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
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

The World’s Top 10 Gold Producers in 2020

Who produces the world’s gold? Gold production fell again in 2020. According to the World Gold Council, gold production came in at 3,478 tons last year. That compares with mine output of 3,597 tons in 2019.

READ MORE →

Fed Chair Jerome Powell Sticks to Dovish Script During Congressional Testimony

Federal Reserve Chairman Jerome Powell testified before Congress on Tuesday and continued to peddle the “transitory” inflation narrative. Keeping with the dovish tone set after last week’s FOMC meeting, Powell reiterated that the central bank is not going to rush to raise interest rates, and he said the Fed would not hike rates merely in […]

READ MORE →

More Government Debt Means Less Economic Growth

The US government continues to borrow money at a frenetic pace in order to cover its massive spending spree. It runs huge deficits month after month and there is more spending coming down the pike. The national debt is over $28 trillion and it is about to begin surging upward again. But with the exception […]

READ MORE →

Another Inflation Warning: Import-Export Prices Rise Faster Than Expected

In another sign of rapidly accelerating price inflation, import-export prices rose much faster than expected in May. Import prices were up 1.1% month-on-month in May, and the Labor Department revised April’s increase from 0.7% to 0.8%. Projections for May were for a 0.7% increase. The actual number was higher than the high end of estimates.

READ MORE →

Despite Tax Day the Federal Government Runs Another Massive Deficit in May

Typically, the US government runs a budget surplus in the month that tax returns come due. Not this year. Despite a surge in receipts, the federal government ran a $131.95 billion deficit in May, continuing the trend of overspending and ballooning budget shortfalls. The federal budget deficit for fiscal 2021 now stands at $2.06 trillion […]

READ MORE →

Comments are closed.

Call Now