Americans faced record levels of debt at the end of 2018, with the amount owed by households rising for an eighteenth consecutive quarter.
According to the Federal Reserve Bank of New York, overall debt rose by $32 billion to $13.5 trillion in the fourth quarter – an all-time high.
Total household debt was nearly 7% higher than a previous peak of $12.68 trillion seen in the third quarter of 2008, underscoring potentially vulnerable spots in an otherwise humming economy.
“We are not in the ‘red’ zone of danger yet, but these measures are trending in the wrong direction, so it’s something to keep an eye on,” said Josh Wright, chief economist at iCIMS. “There’s a risk there to the U.S. consumer engine.”
Mortgage balance growth flattened in the fourth quarter to the lowest level in nearly four years, remaining essentially unchanged at around $9.1 trillion, but household credit mounted in other areas.
Perhaps most troubling for economists, a record number of Americans were three months or more late on making car payments. At the end of 2018, auto loans facing serious delinquency rose 2.4% to more than 7 million.
“The overall performance of auto loans has been slowly worsening, despite an increasing share of prime loans in the stock,” New York Fed economists wrote in a subsequent report. “The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market and warrants continued monitoring and analysis of this sector.”
Student loan balances also ticked higher, rising $15 billion to $1.46 trillion in the fourth quarter, and serious delinquency rates remained elevated. The report found more than a tenth of student debt was seriously delinquent in the fourth quarter, though the actual rate is likely higher due to situations involving deferment and forbearance.
Credit card balances climbed by $26 billion. The number of credit inquiries within the past six months, meanwhile, declined to the lowest level on record. That could signal trouble for demand and consumer spending, which accounts for more than two-thirds of economic activity.