Today’s Family Debt

TOO MUCH DEBT helped trigger the 2008 financial crisis. Today, the picture is much brighter. Here’s what the latest statistics tell us:

  • Every three months, the Federal Reserve Bank of New York puts out a report on household debt. Over the five years through 2008’s third quarter, the amount of debt carried by U.S. families soared 68%, as we hurtled toward the financial crisis. Americans shed debt over the next five years, as they paid back the money they borrowed and also defaulted on loans. Since 2013’s second quarter, however, borrowing has picked up again. Result: As of 2021’s fourth quarter, Americans were carrying 23% more debt than in 2008’s third quarter and 40% more than in 2013’s second quarter.
  • According to the New York Fed, Americans have an average $55,810 of loans outstanding, including mortgage debt, home equity loans, car loans, credit card debt and student loans. That might seem modest given the large mortgages often needed to buy homes in major East and West Coast cities. But remember, homes are substantially cheaper in many parts of the country, plus the average is influenced by retirees with little or no debt and by the third of American households that don’t own a home and hence have no mortgage.
  • While overall household debt is up just 23% since 2008’s third quarter, student loans have skyrocketed 159%. The money borrowed should help make the U.S. economy more productive and help the students involved earn higher lifetime incomes. Still, this burgeoning debt is proving to be a major problem for many young adults.
  • As of 2019, 76.6% of American families were in debt, according to the Federal Reserve’s Survey of Consumer Finances. The most common types of borrowing are mortgage debt, installment loans like car and student loans, and credit card balances.
  • The Federal Reserve’s 2019 survey found that 45.4% of families had a credit card balance, up from 38.1% six years earlier. Among those carrying card debt, the mean amount owed was $6,270, while the median was $2,700.
  • Where do the most financially responsible Americans live? According to Experian, one of the three major credit bureaus, the four states with the highest credit scores are Minnesota, South Dakota, Vermont and Wisconsin.
  • Margin borrowing is often viewed as an indicator of investors’ appetite for risk. As of December 2021,  there was $910 billion in margin debt outstanding, a hefty jump from $778 billion at year-end 2020 and $579 billion at year-end 2019.

Next: Inflation and Debt

Previous: Borrowing

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