Household debt increased in 3Q2018, the 17th consecutive quarterly increase. It might be hard to believe but household debt is now $837 billion higher than the pre-recession peak.
The Federal Reserve Bank of New York’s Center for Microeconomic Data’s Quarterly Report on Household Debt and Credit presents sad news based on the Feds consumer panel and anonymized Equifax credit data.
Growth comes where you probably do not want it…
- Older borrowers now hold a larger share of total outstanding debt balances, while the shares held by younger borrowers have contracted and shifted toward auto loans and student loans.”
And Non-Housing debt increases across the board.
- Outstanding student loan debt increased by $37 billion and stood at $1.44 trillion as of September 30.
- Auto loan balances increased by $27 billion to $1.27 trillion in 2018Q3.
- Credit card balances rose by $15 billion to $844 billion.
This is a good year for consumers to tighten their belts based on low salary growth, but based on forecasts by the National Retail Federation which suggests a 4.8% increase, consumers probably have not learned their lesson.
While my analyst hat says “happy holidays”, my credit manager’s hat hopes you keep that card in your wallet.
Flat income growth, steady debt increases, and an expectation of increased holiday spending: Ladies and Gentlemen, warm up your collection systems for 1Q19!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group