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Tuesday, August 02, 2022

NY Fed Q2 Report: Total Household Debt Surpasses $16 trillion

by Calculated Risk on 8/02/2022 11:11:00 AM

From the NY Fed: Total Household Debt Surpasses $16 trillion in Q2 2022; Mortgage, Auto Loan, and Credit Card Balances Increase

The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The Report shows an increase in total household debt in the second quarter of 2022, increasing by $312 billion (2%) to $16.15 trillion. Balances now stand $2 trillion higher than at the end of 2019, before the COVID-19 pandemic. The report is based on data from the New York Fed's nationally representative Consumer Credit Panel.

Mortgage balances rose by $207 billion in the second quarter of 2022 and stood at $11.39 trillion at the end of June. Credit card balances also increased by $46 billion. Although seasonal patterns typically include an increase in the second quarter, the 13% cumulative increase in credit card balances since Q2 2021 represents the largest in more than 20 years. Auto loan balances increased by a solid $33 billion in the second quarter, while student loan balances were roughly unchanged from the first quarter and stand at $1.59 trillion. Other balances–which includes retail cards and other consumer loans –increased by a robust $25 billion. In total, non-housing balances grew by $103 billion, the largest increase seen since 2016.

Mortgage originations slightly declined in the second quarter and stood at $758 billion. The volume of newly originated auto loans increased to $199 billion, continuing the high volumes seen in dollar terms since Q3 2020. Aggregate limits on credit card accounts increased by $100 billion and now stand at $4.22 trillion–the largest increase in more than ten years.
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Total Household Debt Click on graph for larger image.

Here are three graphs from the report:

The first graph shows aggregate consumer debt increased in Q2.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a huge decline in debt during the pandemic.

From the NY Fed:
Aggregate household debt balances increased by $312 billion in the second quarter of 2022, a 2.0% rise from 2022Q1. Balances now stand at $16.15 trillion and have increased by $2 trillion since the end of 2019, just before the pandemic recession.
Delinquency Status The second graph shows the percent of debt in delinquency.

The overall delinquency rate was unchanged in Q2.  From the NY Fed:
Aggregate delinquency rates were unchanged again in the second quarter of 2022 and remain very low, after declining sharply through the beginning of the pandemic, although aggregate delinquency rates have seen some change in the composition. The share of balances that are severely derogatory has declined to 1.1%, although the decline has been offset by increases in balances that are 30 days late. As of June, 2.7% of outstanding debt was in some stage of delinquency, a 2.0 percentage point decrease from the first quarter of 2019, just before the COVID-19 pandemic hit the United States.
There is much more in the report.