Americans are having a harder time managing rising debt burdens and in some cases haven’t been this overextended since the aftermath of the Great Recession.
The Federal Reserve Bank of New York on Thursday released its latest comprehensive look at credit conditions for American households in major categories such as mortgages, auto loans, credit cards, home equity lines of credit and student loans.
In the fourth quarter of last year, overall debt levels increased by 0.5% to $18.04 trillion, according to the Quarterly Report on Household Debt and Credit.
All major loan categories tracked in the report saw increases as well. Credit card balances topped $1.2 trillion, rising 7.3% from the fourth quarter of last year and logging the smallest yearly increase since 2021.
Higher levels of household debt are to be expected as they can reflect factors such as population growth, strong economic conditions, holiday-related spending and the rise of e-commerce.
However, Thursday’s report also showed that Americans appear to be having more difficulty dealing with that debt — specifically for auto loans and credit cards.
The share of households becoming seriously delinquent (a missed payment for 90+ days) on their auto loans and credit cards are at 14-year highs.
The increase in the percentage of loans transitioning into serious delinquency partly reflect the higher-balance loans that resulted from cars becoming significantly more expensive following the pandemic and related supply chain disruptions, New York Fed researchers noted.
Overall delinquency rates increased slightly from the previous quarter, with 3.6% of outstanding debt in some stage of delinquency, according to the report.
