U.S. Household Debt up $193 Billion to $13.15 Trillion to End 2017

Date : 02/13/2018 @ 11:29AM
Source : Dow Jones News

U.S. Household Debt up $193 Billion to $13.15 Trillion to End 2017

By Eric Morath 

U.S. household debt rose for the 14th straight quarter in the final three months of 2017, pushing further into record territory as confident Americans added to mortgage loans and credit-card balances.

The Federal Reserve Bank of New York said Tuesday that household debt rose by $193 billion to $13.15 trillion last quarter, completing the fifth straight year overall balances increased. Total debt was the most on record, though the figure wasn't adjusted for inflation or population growth.

As a share of U.S. economic output, household debt was about 67% last quarter, barely edging up from the third quarter and well below a high of around 87% in early 2009.

The fourth-quarter increase was mostly driven by larger mortgage balances, which rose by $139 billion last quarter to $8.88 trillion. Mortgage loans account for about two-thirds of all household debt. Still, overall mortgage balances remain below prerecession levels.

Separate reports showed 2017 was the best year for home sales since 2006.

Americans' willingness to take on additional debt and make big purchases suggests they are confident in their job prospects and about the longevity of the economic expansion, which began in mid-2009.

Overall economic growth picked up near a 3% annual rate during the last nine months of 2017, well above the near 2% pace recorded since the recession ended. Meanwhile, the unemployment rate fell to a 17-year low.

Consumers added to $26 billion to credit-card balances in the fourth quarter, bringing the total to $834 billion. That indicates Americans took on debt to boost household spending. Consumer confidence has been tracking at near a two-decade high. In late 2017, they were saving at the lowest rate in 12 years, separate data showed.

Most U.S. workers are expected to see larger paychecks early this year due to lower taxes. It remains to be seen if Americans will use that windfall to boost spending further, pay down debt or add to savings.

Beyond mortgage and credit-card balances, most other forms of debt rose fairly modestly in the fourth quarter of 2017. Balances on home-equity lines of credit fell both for the quarter and for the year.

The pace at which Americans added to their debt load slowed slightly. Balances grew by 4.5% from a year earlier in the October through December period, compared with a 4.9% advance in the third quarter, from a year earlier.

Americans appear to be managing their debt fairly well. The share of debt considered to be seriously delinquent, meaning payment is at least 90 days late, fell slightly to 3.12% in the fourth quarter from 3.19% the prior period.

The serious delinquency rate on mortgage loans has trended down for several years. Delinquency on credit cards held fairly steady last year, ending a period of decline. Delinquency on auto loans edged up in the fourth quarter, though the average credit score for new auto loans rose slightly. Student-loan delinquency is well above prerecession levels.

The New York Fed's quarterly report on household debt and credit is based on data from the credit-ratings firm Equifax.

Write to Eric Morath at eric.morath@wsj.com

 

(END) Dow Jones Newswires

February 13, 2018 11:14 ET (16:14 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.


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