Household Debt Jumps

by Marilou Long on February 18, 2014

in Credit Crisis,Debt,Economic Indicators,Residential Real Estate

Americans borrowed money at the highest quarterly rate since before the recession.  This shows a big increase in their confidence about the future.  From the linked WSJ article:

Americans ramped up their borrowing at the end of last year as their confidence improved, posting the largest increase in household debt since before the recession.

Household debt, which includes mortgages, credit cards, auto loans and student loans, jumped $241 billion, or 2.1%, between October and December to $11.52 trillion, new figures from the Federal Reserve Bank of New York showed Tuesday. That was the biggest quarterly rise since the third quarter of 2007, just before the recession began.

Mortgage balances, the biggest part of household debt, increased $16 billion in the fourth quarter of 2013 from a year earlier, ending a four-year streak of year-over-year declines. That was largely due to fewer bankruptcies and foreclosures. Credit-card balances rose by $4 billion from a year earlier. Auto-loan balances rose by $80 billion. Student-loan balances rose by $114 billion from the prior year.

All told, overall debt is up $180 billion from the fourth quarter of 2012, the first increase from year-ago levels since late 2008. U.S. household debt remains 9% below its peak of $12.7 trillion in the third quarter of 2008.

The report suggests Americans are feeling confident enough in their finances to borrow again, after years of shedding the debt they accumulated before the financial crisis.

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