Total U.S. Consumer Debt Up, Breaks 4-Year Downward Trend

Total U.S. Consumer Debt Up, Breaks 4-Year Downward TrendIt may just be a blip in the middle of a trend, but total U.S. consumer debt did something in the fourth quarter of 2012 that it hadn’t done in four years — it increased.
The latest Household Debt and Credit Report from the Federal Reserve Bank of New York pegs total consumer debt at $11.34 trillion, 0.3 percent ($31 billion) higher than the previous quarter, breaking a downward trend since the fourth quarter of 2008.
But that’s considerably lower than its peak of $12.68 trillion in the third quarter of 2008.
The report also points to the troubling growth of student loan debt over the past eight years, nearly surging three-fold to nearly $1 trillion, or $966 billion to be exact as of the fourth quarter of 2012.
The overall number of borrowers past due on their student loan payments has also soared, from under 10 percent in 2004 to 17 percent in 2012.
“The data provides early evidence that consumers may be reaching the end of the four year deleveraging cycle, though we’ll need to see if this is sustained in upcoming quarters,” said Andrew Haughwout, vice president and economist at the New York Fed.
The increase was primarily due to a rise in non-housing debt and the stabilization of mortgage debt.
Outstanding mortgage debt remained flat, but originations of new mortgages rose to $553 billion, a fifth consecutive quarterly increase.
Non-housing debt balances increased for the third straight quarter to $2.75 trillion, up 1.31 percent in the fourth quarter.
All non-housing components increased; auto loans up $15 billion, student loans up $10 billion and credit cards up $5 billion.
The student loan debt total of $966 billion represents an increase of $10 billion from last quarter.  The percent of student loan balances 90 days-plus delinquent increased again and stands at 11.7 percent.
The quarterly report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from Equifax credit reports.Total U.S. Consumer Debt Up, Breaks 4-Year Downward Trend

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