U.S.Household Debt Reaches $18.59 Trillion in Third Quarter, Fed Reports
New York - American households amassed a record $18.59 trillion in debt during the third quarter of 2024, according to a report released thursday by the Federal Reserve Bank of New York. The figure represents a $143 billion increase from the previous quarter,marking the largest quarterly increase since the first quarter of 2022.
The surge in borrowing underscores growing financial strain on U.S. consumers as persistent inflation and higher interest rates continue to impact affordability. While overall economic growth remains resilient, the escalating debt levels raise concerns about potential risks to future spending and financial stability, particularly for lower-income households. The increase was driven primarily by gains in mortgage, auto, and credit card debt.
Mortgage balances rose by $95 billion to $12.13 trillion, while auto loan debt increased by $12 billion to $1.61 trillion. Credit card debt climbed by $15 billion to $1.07 trillion, with balances continuing to trend upward despite elevated interest rates. Non-housing balances,which include student loans and other debts,increased by $32 billion.
Federal Reserve Chairman Jerome Powell recently noted a “bifurcated economy,” observing that consumers at the lower end are struggling and shifting to lower-cost products, while higher-income individuals continue to spend robustly. The rising debt levels suggest this divergence is widening, possibly creating further economic imbalances.
Delinquency rates remain relatively low but are showing signs of creeping higher, particularly in credit card and auto loan sectors. The report indicated that 2.9% of outstanding debt was in some stage of delinquency in the third quarter, a slight increase from the previous quarter. Economists will be closely watching these trends in the coming months to assess the potential impact on consumer spending and overall economic growth.
