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Household Debt Jumps the Most in 12 Years

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    Household Debt Jumps the Most in 12 Years

    https://www.cnbc.com/2020/02/11/hous...port-says.html




    Household debt surged by more than $600 billion in 2019, marking the biggest annual increase since just before the financial crisis, according to the New York Federal Reserve.

    Total household debt balances rose by $601 billion last year, topping $14 trillion for the first time, according to a new report by the Fed branch. The last time the growth was that large was 2007, when household debt rose by just over $1 trillion.

    Fed economists said on the Liberty Street Economics blog that the growth was driven mainly by a large increase in mortgage debt balances, which increased $433 billion and was also the largest gain since 2007.

    Housing debt now accounts for $9.95 billion of the total balance. Balances for auto loans and credit cards both increased by $57 billion for the year, according to the Fed.

    The economists said in the blog post that credit cards have again surpassed student loans as the most common form of initial credit history among young borrowers, following several years after the crisis when student loans were higher.


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    Household debt hits highest level since 2008: NY Fed




    “The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers,” Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in a statement.

    However, even as the total amount of household debt has risen, the level of household debt service as a percentage of disposable personal income is at all-time lows going back to 1980.

    The new report showed that credit standards tightening for some forms of debt even as the overall balance increased. The median credit score for newly originating borrowers for mortgages and auto loans increased slightly in the fourth quarter, according to the Fed.

    Mortgage originations were $752 billion in the fourth quarter, the highest quarterly increase since 2005, but this was mostly due to an increase refinancing activity, the Fed said in a press release.
    Brian

    #2
    No surprise here. Despite the propaganda coming out of DC, most people aren’t better off than they were a few years ago. Prices are up. Wages are flat or worse. Unemployment may be low but underemployment is high. Medical bills, college expenses, senior care and more are all making it harder and harder for people to make ends meet. Hence rising debt. It all makes perfect sense.

    The bull market on Wall Street helps folks like the regulars here but it doesn’t have much if any impact on the average guy or gal.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

    Comment


      #3
      I think your student loans and medical costs are a big factor in this from what I read and the people I know, but i also think that getting credit in America is a lot easier than our country you have so many hoops here to buy a house/car or even get a CC that a lot can't so they don't go into debt...if that makes sense

      Comment


        #4
        Quote "However, even as the total amount of household debt has risen, the level of household debt service as a percentage of disposable personal income is at all-time lows going back to 1980." Quote

        I love when they throw lines in to articles... usually following the standard of 75% through the article so they lose most of the skimming readers..... this is one of the reasons I shake my head at some financial articles.

        If people are waiting for media or government to tell them how they are doing they are already lost.....
        The rising debt as article says has a lot to do with new and refinanced mortgages and credit card spending and the growing delinquency among younger borrowers perhaps numbers are driven more by either good or bad money habits.

        As an avid people watcher most of those in the worst shape have many self inflicted wounds.
        The complaint that "the stock market is not helping me" ... you cannot gain if you do NOT invest. Many don't because they don't like the risk that what goes up CAN go down. it is easier then ever with Apps to invest if you want to.

        Regardless of stock market or politics people can take control of their debt and decide when or if they chose to climb out or dive into the debt pool.

        There is also big disconnect as some areas may be doing far better then others as far as employment etc in the area I live if your wage is low there are many other jobs out there and many companies know it is easier to up the pay then to lose people to the place down the road ......
        Many whom are "stuck" have simply not played the game to leverage their worth instead many IMO wait hoping that someone comes along and turns the steps they are standing on into an escalator. so they can move up with no effort.




        Comment


          #5
          Its interesting that there was a post from about a week ago saying that consumer confidence is at an all time high.
          But, personal debt is jumping too.
          Are consumers confidently racking up debt?

          Brian

          Comment


            #6
            Originally posted by bjl584 View Post
            Its interesting that there was a post from about a week ago saying that consumer confidence is at an all time high.
            But, personal debt is jumping too.
            Are consumers confidently racking up debt?
            BJ - great point. It could be that because of the good economy, we're seeing people are more willing to take on debt.
            james.c.hendrickson@gmail.com
            202.468.6043

            Comment


              #7
              Originally posted by disneysteve View Post
              No surprise here. Despite the propaganda coming out of DC, most people aren’t better off than they were a few years ago. Prices are up. Wages are flat or worse. Unemployment may be low but underemployment is high. Medical bills, college expenses, senior care and more are all making it harder and harder for people to make ends meet. Hence rising debt. It all makes perfect sense.
              I don't think the above is the case.
              I think it's more because we've had a pretty good financial run since about 2010. Business has been strong, they haven't seen many layoffs, everyone that wants to is working all they want to, so they are buying; new homes, new automobiles, big ticket household items, new toys, running up credit cards, etc. Pretty typical behavior, acting like good times are going to be here forever, consumer confidence.

              The thing that stuns me the most is seeing how much young people are spending for their houses.

              Comment


                #8
                Originally posted by bjl584 View Post
                Its interesting that there was a post from about a week ago saying that consumer confidence is at an all time high.
                But, personal debt is jumping too.
                Are consumers confidently racking up debt?
                When people keep hearing that things are good, they get more confident and spend and borrow more freely. Of course, that's a dangerous mindset. First, they do it even if their personal situation isn't any better than it had been. As long as the news keeps telling them how great things are, it influences their behavior. And second, people always feel most confident when things are reaching their peak and a downturn is just around the corner.

                On the other hand, we have gotten ourselves completely out of debt for the first time in our adult lives and we are stockpiling cash, saving more than ever before. I'm hoping that puts us in a much better and safer position when the crash eventually comes, and it will come.
                Steve

                * Despite the high cost of living, it remains very popular.
                * Why should I pay for my daughter's education when she already knows everything?
                * There are no shortcuts to anywhere worth going.

                Comment


                  #9
                  Originally posted by mumof2 View Post
                  i also think that getting credit in America is a lot easier than our country you have so many hoops here to buy a house/car or even get a CC that a lot can't so they don't go into debt...if that makes sense
                  So true. The easy availability of nearly limitless credit in the US is insane. Student loans are a perfect example. The borrowing limits on Federal loans are really quite reasonable. However, private lenders have no such limits. They will lend you as much as you want to borrow. That's where students really get into trouble. Mortgage lending hasn't gotten quite as bad as it was before the 2008 crash but there are definitely signs that it has been moving back in that direction. And you can't drive past a used car lot without seeing signs like, "We finance everyone". Well, you know, maybe that isn't such a great plan. Maybe there are people who shouldn't really be granted loans that they can't possibly afford.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment

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