Aggregate household debt stood at $13.5 trillion in the fourth quarter of 2018 and has now increased for 18 consecutive quarters, according to a recently released quarterly report from the New York Federal Reserve. This is a 0.2% increase from the third quarter and a 3.0% rise from a year ago.
Household debt has now increased on an annual basis for 21 straight quarters after declining for 19 successive quarters from Q1 2009 to Q3 2013. Moreover, household debt is now 21.4% above the Q2 2013 trough of $11.2 trillion.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Feb. 15.Key observations:
- Student loans led the way with a 5.7% year-on-year rise in the fourth quarter, followed by auto loans and credit cards with growth of 4.3%.
- Mortgage balances increased 2.7%, while balances on home equity lines of credit declined 7.2% and have now been negative compared to a year ago since the first quarter of 2010.
- An inherent downside risk in extending credit to subprime consumers is a rising delinquency rate as loans mature. The 90-day or more delinquency rate – defined as seriously delinquent – jumped from 1.52% in late 2012 to 2.36% in the fourth quarter of 2018.
- Real GDP is estimated to have expanded 3.1% Q4/Q4 last year, but is forecast to slow to 1.8% this year and slow further in 2020.
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