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Record-Setting Debt Propping Up Recovery?

September 11, 2017

Americans continue to set records when it comes to household debt. In the first quarter of this year, U.S. household debt, which includes mortgages, student loans, auto loans, credit card debt and more, rose to its highest level ever.

 

In other words, Americans borrowed more money than any other time in history. Total household debt rose $149 billion to $12.73 trillion overall, surpassing the old record of $12.68 trillion right before 2008’s financial crisis.

 

 

 

 

 

 

 

 

 

But wait, there’s more!

In the second quarter of this year, we surpassed our previous performance and pushed the overall consumer debt balance to $12.84 trillion!

 

 

 

 

 

 

 

 

 

 

 

 

 

Is there an immediate danger? Not really, but when debt is piling up like in 2008, it is a bit concerning.

 

On top of that, delinquency across all lines of credit has risen, including credit card debt that is 90 or more days late, which has increased for the third straight quarter. Auto loans of the “deep subprime” variety, which means the bottom of the barrel, are delinquent at similar rates to the financial crisis.

 

This data points to cracks in the recovery. The foundation is shabby. And if history repeats itself, credit markets could close, which could usher in a recession, or perhaps even another full-blown crisis.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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