Household debt hit record $16.9T

https://abc7.com/us-household-debt-credit-cards-record-card-balance/12825921/

by lxm • 3 years ago

39 38 3 years ago

abc7.com

metadat5• 3 years ago

16.9T of c̶c̶ household debt is around $80,000 per American adult. Not the best.

Even still, a lot of alarmist phrasing in this piece:

During the fourth quarter of last year, mortgage originations dropped to 2019 levels

Wasn't real estate doing fairly well before the pandemic?

While total delinquency levels remain below what was seen pre-pandemic - 2.5% of outstanding debt was in some stage of delinquency as of December versus 4.7% at the end of 2019

What's the underlying agenda here? None of this appears deeply concerning to me.

Edit: @eyphka I estimated there are approximately 300m Americans, so that's what I divided by. Turns out there are actually only 200m American adults, though, so the figure is probably more like $7-8k/American taxpayer.

Edit #2: I was off by a factor of 10! 16.9T/200m = $80,000. Sorry.

eyphka2• 3 years ago

Math's off should be a little more than that.

Average U.S. household owes something close to six figures in debt ~ 7% growth in one year

Ancalagon2• 3 years ago

That figure includes mortgage debt, GP said CC debt.

knapcio2• 3 years ago

7% is less than inflation so the real debt actually decreased

mint22• 3 years ago

Something doesn’t add up unless there’s over 30 ppl in average households.

Is one number revolving debt and the other all debt? Including mortgages the 165k sounds reasonable

JumpCrisscross• 3 years ago

What's the agenda?

Selling clicks. A decent number of Americans view debt as immoral, and will consume content implicitly rewarding financial piety.

coliveira2• 3 years ago

There's nothing moral about it: debit is helpful if it helps you make more money. If you have no way to pay it, debit is really a terrible problem.

drc500free• 3 years ago

I think many Americans see consumer debt as a sign that households aren’t building wealth. It really depends on the type of debt and how it’s distributed amongst consumers.

peyton• 3 years ago

It’s about $50k.

Ancalagon2• 3 years ago

I mean that sounds like a lot of debt to me when the median income is like $54k a year [1].

[1] https://www.firstrepublic.com/insights-education/how-much-do....

loeg3• 3 years ago

Does it make sense to compare mean debt to median income?

subpixel• 3 years ago

But this debt is mostly mortgages and most people making the median income don’t have one.

loeg3• 3 years ago

Isn’t it total household debt, not exclusively credit card debt? Credit card debt is only $986B.

$80k per American isn’t that crazy when you look at a mortgage or car note.

coliveira2• 3 years ago

Except that debt is not evenly distributed. Lots of people have zero CC debt, and many others have several tens of thousand dollars in debt. As interest rates climb it is expected that delinquencies will increase.

danans• 3 years ago

16.9T of cc debt is around $5,600 per American.

Total debt, not CC debt. The vast majority is mortgage debt, so "secured". According to TFA the uptick is due to increasing CC debt.

hsbauauvhabzb• 3 years ago

Would an average even mean much, as opposed to debt to income ratio? Lower incomes will presumably have a higher debt to income ratio.

rayiner• 3 years ago

You've dropped a zero somewhere. Your calculation assumes 3 billion americans.

There's 100 million American households. $16.9e12/100e6 = $169,000.

metadat5• 3 years ago

Thanks for the correction.

a5withtrrs• 3 years ago

Uh. Did you miss a decimal point? 16.9 trillion divided by 200 million is $84,500. That's a huge difference.

metadat5• 3 years ago

Agreed. My bad.

mint22• 3 years ago

Edit your edit, there’s 331.9 million Americans as of (2021)

metadat5• 3 years ago

Only 200m Americans over the age of 18. Children generally don't have debt.

yieldcrv• 3 years ago

"But, on a person-level, this financial distress is real, and the delinquent marks will impact their access to credit for years to come."

Much more likely that lenders will change their standards. Loosening/lower specifically.

throwaway12245• 3 years ago

https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/HDTGPDUSQ163N Doesn't look that bad, but inflation is hurting.

ianburrell• 3 years ago

Debt to income and GDP has dropped a lot since the peak in 2007 before recession. There was big drop during pandemic as people used stimulus to pay off debt and maybe had less to spend money on. Debt has come back quickly but is more things returning to normal. The current amount of debt is abnormally low.

melling• 3 years ago

Can someone please adjust for inflation and put things in context.

wtf_is_up• 3 years ago

https://fredblog.stlouisfed.org/2019/10/households-lightenin...

There is a lot of good data on FRED to look at instead of these alarmist local news stories.

drexlspivey• 3 years ago

How come this was on the top of HN 5 minutes ago and now it’s not even in the first page?

dang• 3 years ago

We downweighted it because it's one of those perennial repetitive stories that doesn't contain significant new information [1] and therefore can't support a substantively different discussion [2]. Threads that can be predicted from previous sequences are basically off topic here.

This is not to say that the topic is unimportant - of course it's important. But HN's criterion for being on topic is not importance, but interestingness.

https://news.ycombinator.com/newsguidelines.html

[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

[2] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&so...

Rebelgecko2• 3 years ago

In a world where inflation >0%, wouldn't we expect almost every day to set a record for "most debt ever"?

zzleeper• 3 years ago

Yep. A consequence of decades of low inflation is that most people still think in nominal terms. Otherwise they would be calling out journalists for these silly hesdlines

yucky• 3 years ago

From the article:

  > Year over year, credit card balances grew 15.2%

That is quite significant and does not track with inflation.

loeg3• 3 years ago

Yeah, but total household debt only grew 7%, which approximately tracks with inflation. Similarly, inflation is measured over a basket of goods, some of which grow in price more slowly than others -- not exclusively the goods paid for on credit cards.

Rebelgecko2• 3 years ago

Perhaps,but not surprising given the prevailing interest rate situation. I got multiple offers on my CCs to lower the APR to 0% for 12-18 months. At that point it's financially better to carry a balance, throw the cash in a HYSA and pay it off in 2024. My Own CC balance has grown by like 600%

hpen• 3 years ago

I don’t think debt is the end of the world but debt as high as GDP is pretty bad.

Household debt hit record $16.9T

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