U.S. household debt reached a new record of $12.8 trillion in the second quarter, driven by rising mortgage debt, a strong quarter for auto loan originations, and an uptick in credit-card balances, which reached their highest level since 2009.
Today's report marked the 12th consecutive quarterly increase in household debt, as Americans continue to re-embrace credit as the financial crisis recedes into memory. The total volume of debt is now $1.7 trillion higher than it was in 2013, according to the Federal Reserve Bank of New York's quarterly report on household debt and credit.
While overall debt has increased, the figures aren't adjusted for the growth of the population or the economy. Total debt was 67% of the nominal gross domestic product in the second quarter, down from as high as 87% in 2009.
The increase partly reflects renewed confidence in the economy, as Americans are more willing to purchase homes and borrow to fuel consumer spending. But there are signs that some households are becoming overstretched, with a rising share of credit cards going delinquent each quarter.
About 6.2% of credit card balances became 30 days delinquent over the quarter, an increase from 5.1% in the same quarter a year ago. Though on the rise, it's still well below the amount of delinquency seen during the financial crisis, when as much as 13% of balances were going delinquent. The share of credit cards becoming 90 days delinquent has also risen, an early sign that some borrowers are becoming distressed.
"While relatively low, credit-card delinquency flows climbed notably over the past year," said Andrew Haughwout, a New York Fed economist. "The current state of credit-card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress."
Total credit-card debt climbed by $20 billion in the second quarter, reaching $784 billion, the highest level since the fourth quarter of 2009.
The quarter also showed strong increases in auto lending, with $148 billion of new auto loans originated in the quarter, including $51 billion of loans to borrowers with credit scores under 660, which are considered subprime. Both figures are near the highest levels of the past 10 years. The total volume of auto loans rose by $23 billion and is now at a record $1.19 trillion.
Auto loans are showing some increased signs of distress as well; various measures of delinquency have been slowly rising for the past four years.
Student-loan balances were unchanged in the quarter. The figures aren't seasonally adjusted and due to the academic calendar, few students take on loans in the second quarter.
The biggest category of household borrowing is for mortgages. Total mortgage balances increased by $64 billion in the quarter. Borrowing for mortgages has been slow to recover since the financial crisis and remains about 6.5% below its peak in 2008. Delinquency rates on mortgages have dropped after spiking during the financial crisis, and are now the type of debt with the lowest delinquency.
The data is compiled by economists at the New York Fed and based on the borrowing records of millions of consumers that are compiled by the credit-rating agency Equifax.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
August 15, 2017 11:14 ET (15:14 GMT)