New Federal Reserve Study Shows Total Household Debt at Highest Levels Ever

According to a report by the Federal Reserve Bank of New York’s Center for Microeconomic Data, household debt rose again in the second quarter of 2017 to $9.14 trillion. At $8.69 trillion, home mortgages account for the vast majority of household debt. When combined with non-household debts, total indebtedness rose to an all-time high of $12.84 trillion. American household debt has been on a steady rise in the past 3 years following a massive deleveraging after the mortgage crisis of 2008. The report on household debt is part of a nearly 20-year old continuing study on consumer borrowing by the Federal Reserve.

Of note, credit card debt rose $20 billion during the second quarter of 2017. The Federal Reserve explained that since 2008, mortgages have shrunk in size while Americans take on more debt from non-household sources like auto loans, student loans, and credit cards. Debt balances also appear to be shifting toward older borrowers, with 22.5% of total outstanding balances held by Americans 65 years and older vs. only 15.9% for that demographic in 2008. The report further strengthened data on housing inequality, recognizing a mortgage rebound for higher income homeowners as lower income Americans become more swamped with non-household debts.

The Federal Reserve’s data on the demographics of outstanding debt holders reinforces previous studies showing millennials are struggling to access credit. Credit invisibility, the lack of information needed for a bureau to accurately assign a credit score to an individual, is a constant problem for young and lower income Americans. The Federal Reserve report did not discuss the potential impacts of an increasing debt burden on millions of Americans.