Bust: U.S. household debt nearing 2008 levels
Thanks in large part to massive student loan and credit card debt, American households are dealing with an economic reality similar to the financial squeeze in 2008.
According to a report out from the Federal Reserve Bank of New York, the nation’s household debt level rose by $226 billion in the final quarter of 2016, bringing the total to $12.58 trillion.
That’s just .08 percent less than the amount of debt held by U.S. households as the nation bore the brunt of economic recession kicked off by the housing crisis in 2008.
The debt levels are expected to hit new highs in 2017.
The largest portion of household debt continues to be made up of mortgages, which consume about 67 percent of the total.
But the amount of student loan debt has risen steadily in recent years. In total, Americans owed $1.31 trillion in student loan debt by the end of last year.
Student loans now account for about 10 percent of all household debt, followed by auto loans (9 percent) and credit cards (6percent).
And while the Fed report said delinquencies were down from 2016, the average credit score of U.S. consumers dropped in December.
Many economists are concerned that continued rises in debt levels are signal that debt-burdened college graduates are struggling to keep up with their commitments. This is causing many to put off important economic milestones like home purchases, further depressing the potential for economic growth in the U.S.