the staff of the Ridgewood blog
Ridgewood NJ, the Federal Reserve released the latest data on consumer credit . Consumer credit increased at a seasonally adjusted annual rate of 0.4 percent during the third quarter. Revolving credit increased at an annual rate of 8.6 percent, while nonrevolving credit decreased at an annual rate of 2.4 percent. In September, consumer credit increased at an annual rate of 2.2 percent.
Americans’ credit card debt swelled to a record $1.08T in Q3, up $154B from Q3 2022, amid strong consumer spending, according to the Federal Reserve Bank of New York. This marks the largest increase since the NY Fed began tracking household debt in 1999.
Total delinquency rates rose in Q3, with 3% of outstanding debt in some stage of delinquency at the end of Sept. Delinquency rates increased the sharpest for millennials (aged 30-39), while credit card delinquencies have surpassed pre-pandemic levels.
“Credit card balances experienced a large jump, consistent with strong consumer spending and real GDP growth,” said Donghoon Lee, economic research advisor at the NY Fed.
“The continued rise in credit card delinquency rates is broad based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans,” he added.
NY Fed researchers cautioned that since the labor market and the economy have remained resilient, “pinning down the causes of rising delinquencies rates is more difficult.”
The financial website WalletHub did an inflation-adjusted analysis and it revealed that U.S. households increased their debt by roughly $78 billion during Q3 2023. WalletHub’s Household Debt Report adjusts data for inflation to accurately show how debt compares to historical levels. You can find key highlights below.
- Face Value: Household debt is at a record high ($17.3 trillion), but when you adjust for inflation, the total is 7% below its peak from 2008.
- Projection: U.S. households will end the year with $350+ billion more debt than they started with, WalletHub now projects.
- Household Average: The average household owed a total of $145,319 at the end of Q3 2023, only $13,631 below WalletHub’s projected breaking point for household finances.
- Total Debt to Deposits Ratio: The ratio between total household debt and deposits has been going down over the years, and it is still below pre-Covid levels as well as roughly 53% below the peak from the early 2000s.
- Total Debt to Assets: The ratio between total household debt and assets has been dropping steadily, reaching 9.8% in Q3 2023, which is about 42% below the peak.
See the full results of WalletHub’s Household Debt Report, and read WalletHub’s commentary and tips below. Tips are also included in audio format. Feel free to use the content and edit the raw file as you see fit.
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