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Household debt levels make biggest annual jump in 14 years

By
Don Jacobson
Federal Reserve Chairman Jerome Powell testifies before the House Financial Service Committee on the monetary policy and the state of the economy on Tuesday. Photo by Kevin Dietsch/UPI
Federal Reserve Chairman Jerome Powell testifies before the House Financial Service Committee on the monetary policy and the state of the economy on Tuesday. Photo by Kevin Dietsch/UPI | License Photo

Feb. 11 (UPI) -- Total U.S. household debt rose 1.4 percent to more than $14 trillion in the fourth quarter, the Federal Reserve said Tuesday, closing out a year that saw the biggest jump in debt levels since 2007.

It marked the 22nd straight quarter in which household debt levels have risen and ended 2019 with an annual increase of $601 billion, the largest gain in 14 years.

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The final three months of the 2019 saw Americans add $193 billion to their household debt load, pushing the record U.S. total $1.5 trillion higher than the previous peak of $12.7 trillion reached in late 2008, just before the onset of the financial crisis.

The biggest component of household debt are mortgage balances, and the 4Q debt figures reflected the hot housing market as mortgage debt loads rose by $120 billion to $9.56 trillion. The substantial increase came as originations spiked from $528 billion in 3Q to $752 billion in 4Q -- the highest volume seen since 2005.

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But non-housing debt levels rose rapidly as well. Auto loan originations remained high at $159 billion in 4Q, while credit card balances jumped by $46 billion, which has resulted in more delinquencies.

"Mortgage originations, including refinances, increased significantly in the final quarter of 2019, with auto loan originations also remaining at the brisk pace seen throughout the year," New York Fed Senior Vice President Wilbert Van Der Klaauw said in a statement. "The data also show that transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers."

About 4.3 percent of balances held by people ages 18 to 29 became delinquent in 2019, compared with only 2.8 percent of those held by people ages 30 to 39, the Fed said.

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