Newsbreak: $15.8 Trillion and Counting – US Households Break Record for Highest Debt Levels Ever, According to Federal Reserve Report

A recent report from the Federal Reserve Bank of New York, released on February 16, 2023, on their website, reveals that American households collectively owe a record $15.8 trillion in debt. The report shows that household debt rose by $206 billion in the last quarter of 2021, marking the 30^th consecutive quarter of increases in household debt.

The Increase in household debt was driven mainly by a surge in mortgage and auto loan balances, which rose by $140 billion and $39 billion, respectively, in the last quarter. Credit card balances increased by $7 billion, while student loan debt increased by $17 billion.

Despite the high levels of debt, the report indicates that the delinquency rates on household debt remained low. Only 1.3% of all debt was in some stage of delinquency, a level that has been consistent since the second quarter of 2021. The report also revealed that household debt service ratios, which measure the proportion of household income used to service debt, remained low by historical standards.

The report highlights the potential risks of high levels of household debt, including the inability to pay debts due to rising interest rates, job loss, or unexpected expenses. It emphasizes the need to monitor household debt levels and composition as the economy recovers from the pandemic, despite a positive economic outlook.

While the report highlights the record levels of household debt in the US, it also indicates that delinquency rates remain low and debt service ratios are manageable. Nevertheless, experts advise that it is important for households to monitor their debt levels, particularly in light of potential risks that could lead to financial distress.