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American household debt surged to $18.04 trillion in the fourth quarter of 2024, marking the highest level in 21 years. According to a report released by the New York Fed, this represents an increase of $93 billion on a quarterly basis and a total rise of $3.9 trillion since the end of 2019.
Debt Growth Rates
The report reveals that the rate of increase in debt levels is accelerating, indicating a consistent upward trend. It mentions that the overall economic situation and consumer spending are significantly influencing the rise in household debt.
Among household debts, the largest share belongs to mortgage loans, which have reached $13 trillion. Additionally, auto loans stand at $1.66 trillion, student loans at $1.61 trillion, credit card debt at $1.21 trillion, and other categories account for $550 billion.
Payment Difficulties and Delinquency Rates
Many Americans are facing difficulties in repaying various debts, resulting in an increase in delinquency rates. Current reports indicate that 11.4% of credit card balances have not been paid for over 90 days, representing a year-over-year increase. Delinquencies in other types of loans have been observed at a rate of 9.2%.
Moreover, delays exceeding three months have been reported in debts such as auto loans, mortgages, student loans, and HELOCs. In the last quarter, approximately 123,000 Americans received bankruptcy notes on their credit reports.
New York Fed stated: “Total default rates have shown a slight increase in the fourth quarter of 2024. Transition rates to serious delinquency have risen for auto loans, credit cards, and HELOC balances while remaining stable for mortgage loans.”
Data indicates that the challenges consumers face in repaying debts are reflected in economic indicators. The report emphasizes the need for careful monitoring of debt growth dynamics and delinquency rates for economic stability.
In light of this information, economic policymakers and financial institutions may evaluate the necessity of taking prudent steps in debt management. Monitoring economic data can provide crucial insights that may guide future actions.
