By Alice Seeley
On Aug. 2, The Federal Reserve Bank of New York announced that U.S household debt exceeded $16 trillion for the first time during the second quarter of 2022. This is a 2% ($312 billion) increase from the first quarter of 2022.
Currently, debt is now $2 trillion more than it was before the COVID-19 pandemic. The two main factors were mortgages and credit cards. Mortgages, which now stand at $11.39 trillion, accounted for two-thirds of the increase last quarter and rose by $207 billion. Credit card balances grew by $46 billion from the previous quarter and 13% from a year ago, which is the biggest increase in over 20 years.
Another major factor was car loan balances which jumped by $33 billion since last quarter. Student debt remained roughly the same at $1.59 trillion. Overall non-housing balances rose by 2.4 % ($103 billion), the largest increase since 2016.
This record-high debt occurs as Americans struggle to make ends meet due to record-high inflation.
“Americans are borrowing more, but a big part of the increased borrowing is attributable to higher prices,” The New York Fed wrote.
“Although debt balances are growing rapidly, households, in general, have weathered the pandemic remarkably well, due in no small part to the expansive programs put in place to support them,” the New York Fed stated. “Further, household debt is held overwhelmingly by higher-score borrowers, even more so now than it has been in the history of our data.” This last quarter 2.7% of outstanding debt was in delinquency which is 2% lower than before the COVID-19 pandemic.