In the first quarter of 2017, the American Household total debt is $12.73 trillion, as announced by the Federal Reserve Bank of New York. This number has surpassed the 2008 record during the most recession.
In the same report, nearly 5 percent of these debts are delinquent. The total household debt increased by 1.2 percent compared with the last quarter of 2016. That is equivalent to $ 149 billion in debt added to the outstanding debts the prior quarter.
As the country’s unemployment rates plummet and robust gains in jobs continue, the American’s willingness to borrow also increased. The debts numbers increased 14.1 percent in the first quarter.
Not a Cause for Alarm, Economist Said
Federal Reserve Bank of New York Economist Donghoon Lee said, “Almost nine years later, household debt has finally exceeded its 2008 peak, but the debt and its borrowers look quite different today.” He added, “This record debt level is neither a reason to celebrate nor a cause for alarm.”
While the mortgage industry still holds the biggest slice in the entire debt pie, car and student loans are now taking up bigger chunks from the total household debts.
Lending Pace Slower that 4Q 2016
Auto loan and student loan debts surged in the first quarter, climbing 0.9 percent and 2.6 percent respectively. Also in a rising trend compared to the fourth quarter of last year are the mortgage debts. It rose 1.7 percent.
Credit card debts took a downward shift by 1.9 percent. Same goes for home equity lines of credit, having a 3.6 percent decrease in the first quarter. Other types of debts also decreased 2.7 percent from the last three months of 2016. It is said that the trend for new lending slowed down compared to the fourth quarter.
Household debts only take 66.9 percent of the country’s nominal GDP in the first three months of 2017. It is very low compared with 2008 where total debts comprised 85.4 percent of the GDP in the third quarter.