It took nine years, but USA household debt has finally topped its peak during the 2008 financial crisis, reaching $12.7 trillion.
Student debt has more than tripled as a share of total debt owed by USA households in less than 15 years, new data show.
Credit card balances declined, delinquencies increased and the aggregate credit card limit increased for the 17 consecutive quarter.
The new record debt level should be neither grounds for celebration nor cause for alarm, said Lee.
But there are some potential warning signs in the latest data. Some 19.6% of auto-loan originations last quarter went to borrowers with credit scores below 620, down from 29.6% a decade earlier. Credit-card debt fell 1.9%, and other types of debt were down 2.7% from the fourth quarter. What stands out here is that it is about $50 billion above the previous peak reached back in the third quarter of 2008 - right before the recession kicked into overdrive.
But borrowing increased sharply during the real estate boom in the mid-2000s. The blog post also explains that, although debt has reached record heights, this number is in nominal terms and it took an unusually long time from a historical perspective for debt to reach the 2008 level again. Household debt is equivalent to 67 percent of the economy in 2017, compared to 85 percent in 2008.
Since then, debt has risen 14 percent as the economy slowly recovered.
Outstanding student loan balances, which the Fed said have "remained stubbornly high" since 2014, grew by $34 billion to $1.34 trillion.
The decline in debt between 2008 and 2013 was an aberration from what had been a sixty-three-year upward trend reflecting the depth, duration, and aftermath of the Great Recession.By comparison, quarterly mortgage originations were averaging about $650 billion during the housing bubble before plunging to less than $300 billion four years ago. Prior to the recession, the average USA household was leveraged to 100 percent of its worth, meaning most people owed as much money as they had.
The reason delinquency has improved is that a lot of the lending is only going to the most creditworthy borrowers.
With some 72 percent of the US GDP driven by consumer purchases, the mounting concerns over student loans, especially non-performing loans (NPLs), are becoming an increasingly prominent factor is assessing the prospects of any further economic acceleration.
In contrast, mortgage delinquencies are trending lower.
One measure, debt at least 90 days past due, was 3.4 percent in the first quarter of the year.
Delinquency measures for auto loans and credit cards are trending up, he said.
As explained in a previous report, delinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are now in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle.
The report also broke down data for the largest states and those hit hardest by the Great Recession, including California, Arizona, Nevada and Florida. That is lower than the national figure.