US household debt reaches $17.06Trillion in Q2 2023

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From the New York Fed website:
HOUSEHOLD DEBT AND CREDIT REPORT (Q2 2023)


Household Debt Rises to $17.06 Trillion Led by Credit Card Balances

Total household debt rose by $16 billion to reach $17.06 trillion in the second quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances saw brisk growth, rising by $45 billion to a series high of $1.03 trillion. Other balances, which include retail credit cards and other consumer loans, and auto loans increased by $15 billion and $20 billion, respectively. Student loan balances fell by $35 billion to reach $1.57 trillion, while mortgage balances were largely unchanged at $12.01 trillion.

For more details:
Report: Q2 2023
Blog: Credit Card Markets Head Back to Normal After Pandemic Pause
Press Release: Total Household Debt Reaches $17.06 Trillion in Q2 2023; Credit Card Debt Hits One Trillion


This was published by the New York Fed as of 8th Aug 2023. Some of the extracts from the New York Fed's post about Housing debt and student loans:
Housing Debt

There was $393 billion in newly originated mortgage debt in Q2 2023 reflecting a modest increase in purchase originations as refinance originations have slowed.
About 39,000 individuals had new foreclosure notations on their credit reports, a very small increase from the first quarter. New foreclosures have stayed very low since even since the CARES Act moratorium was lifted.

Student Loans

Outstanding student loan debt stood at $1.57 trillion in Q2 2023. 
Federal student loan payments remain suspended until October 2023 and missed payments on federal student loans will not be reported to credit bureaus until Q4 2024. Because of these policies, less than 1% of aggregate student debt was reported 90+ days delinquent or in default in Q2 2023.


Household debts in the US include the following categories as of Q2 2023 :
  • Mortgage debt $12.01T
  • Home equity line of credit $0.34T
  • Student debt $1.57T
  • Auto debt $1.58T
  • Credit card debt $1.03T
  • Others $0.53T
Total debt has increased YoY by $909B to reach $17.06T by Q2 2023.

Conclusion
Beyond just the absolute amount of debt incurred, we should also look at the severity of delinquency.  In this case, we are looking at serious delinquency that is 90 days ore more delinquent.

From the categories above, only student loan debt has seen a drop in the flow into serious delinquency. In summation, we see a growth from 0.84% (Q2 2022) to 1.16% (Q2 2023) coming to flow into serious delinquency. Though the quarterly gain in debt was only $16B, there is a $909B gain in debt over the course of 1 year. With the resumption of student loan payments in Q4 2023, will we see more delinquency coming?

From Macromicro

In such a high-interest rate environment, the $17T worth of debt may lead to a debt spiral. Let us pay attention to delinquency. As per the chart above, the surge in delinquency usually happens during the recession itself.


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