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Representative Ro Khanna, D-Cali., Discusses Democrats’ child care plan and the rise in COVID cases amid vaccination efforts.
U.S. household debt rose at the fastest rate in years in the spring, driven by increased credit card spending and home purchases, the New York Federal Reserve said in a quarterly report published Tuesday.
Between April and June, total debt balances soared by $ 313 billion – the largest nominal increase since 2007 and the largest percentage jump since 2014. In total, US consumers held approximately $ 14 billion in debt. $ 96 billion at the end of June, the most on record.
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This is about $ 2.28 trillion more than the previous peak of $ 12.68 trillion in the third quarter of 2008, in the midst of the Great Recession, and about $ 812 billion more than was owed before the pandemic. .
“We have seen a very strong pace of build-ups over the past four quarters with new credit extensions for mortgages and auto loans combined with a rebound in demand for credit card loans,” said Joelle Scally, administrator of the New York Fed’s Center for Microeconomic Data. , said in a statement.
Mortgage balances, the main component of household debt in the United States, jumped $ 282 billion in the second quarter to $ 10.4 trillion. Most of the increase came from mortgage origination, as the Federal Reserve kept the interbank lending rate near zero, resulting in extremely low borrowing rates and increased homeowner refinancing.
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Over the past four quarters, mortgage originations have reached an all-time high, totaling nearly $ 4.6 trillion, or about 44% of all outstanding home balances.
Credit card balances, meanwhile, rose $ 17 billion in the second – well below the $ 140 billion level at the end of 2019, before the virus shut down large swathes of the market. the national economy. Auto loan balances jumped $ 33 billion.
Rising credit card and auto loan balances were offset by lower student loan balances, the only category that declined in the last quarter. Student loan balances declined $ 14 billion over the three-month period, falling to about $ 1.57 trillion.
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The drop largely reflects the aid package implemented by Congress in March 2020 that froze student loan payments until September 30. Payments are expected to resume on October 1, after a 19-month hiatus that benefited about 19 million Americans.
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