Posted on 05/15/23
| News Source: FOX Business
Americans racked up more debt at the beginning of 2023 – and a growing number of households fell behind on payments for several types of loans, according to a New York Federal Reserve report published Monday.
In the first three months of 2023, total household debt surged to a fresh record of $17.05 million, an increase of $148 billion, or 0.9% from the previous quarter. Balances are now $2.9 trillion higher than they were at the end of 2019, before the COVID-19 pandemic began.
Debt largely grew across the board.
Mortgage balances jumped by $121 billion to $12.04 trillion at the end of March, even as mortgage originations plummeted to the lowest level since 2014. Auto loan balances, meanwhile, rose by $10 billion in the first quarter – bucking the typical trend of balance declines in first quarters. Student loan debt also posted a modest increase, rising to $1.6 trillion.
Mastercard credit cards. ((Photo Illustration by Roberto Machado Noa/LightRocket via Getty Images) / Getty Images)
Credit card balances were the only form of debt that did not increase at the start of the year. Balances remained unchanged at $986 billion – the highest level on record – in the period from January to March, which is typically a time when consumers rein in spending after the holiday season and pay down debt.
For instance, over the past 10 years, credit card balances typically drop by 3% in the first quarter, according to the Fed, suggesting that high inflation is continuing to burden households financially.
"This is the first time in more than 20 years that we've seen a first-quarter increase," New York Fed researchers said during a call with reporters. "And I think that's something that's worth flagging here that we're still seeing. I think that credit card balances are really looking a little unusual right now."