US Household Debt Increases By $993 Billion, Now Standing At $13.6 Trillion
For the 19th consecutive quarter, US household debt has risen once again by almost $993 billion after reaching its peak last year. According to a report published by the New York Fed, the country's US household debt now stands at around $13.6 trillion.
The Fed's Quarterly Report on Household Debt and Credit revealed that the increase in debt was mostly boosted by an increase in student loan balances, auto loans, and mortgages across the United States. Serious loan delinquencies, or those that have been late for more than 90 days, have also apparently increased.
This applies mostly to credit cards and student loans as more and more Americans struggle to keep up with payments. The number of student loans that are now becoming delinquent rose by 9.54 percent in the first quarter of this year; a slight rise from the 9.08 percent in the previous quarter. Over 18 percent of the population is now holding students loans. The average loan amount for each individual in the United States stands at around $26,000, which would take an average of 9.5 years to pay off.
The report also shows how millennials are now struggling with juggling their various debts, with most paying for student loans, car payments, and mortgages all at the same time. Most of the people that are struggling with their credit have apparently put on hold major life milestones, such as acquiring property or starting a family. Analysts have mentioned that a significant increase in an economy's delinquency rates could increase the likelihood of a recession in that country.
Other analysts have disagreed with this statement, with most stating that there is still no clear signs of an inflection point in the consumer credit cycle in the United States. The consumer debt growth over the past few years is seen by some as a natural occurrence following the stagnation experience after the financial crisis.
According to the report, Gen Z and late millennials from 18 to 29-years old are the ones having the most difficult time paying their debts. The report explained that the rapid rise in credit card delinquencies reflects the increase in younger borrowers. Credit cards are currently the most popular and most common form of debt incurred by US consumers.
The New York Fed Consumer Credit Panel assured the country that the upward trend shouldn't be an immediate cause for concern given that credit performance remains to be higher than those experienced prior to the recession in 2006.