US household Debt Up Modestly in Third Quarter, New York Fed Says

• Overall U.S. household debt levels increased modestly in the third quarter as borrowing in some form of trouble stabilised and student loan woes increased, the New York Federal Reserve said on Wednesday.
• As part of its latest report on borrowing in the economy, the regional Fed bank said overall borrowing for the third quarter rose 1.0%, or US$197.0Bn, from the second quarter, to US$18.6T. From a year ago, total borrowing was up US$642.0Bn.
• Most categories of borrowing increased relative to the second quarter: Mortgage balances were up US$137.0Bn to US$13.1Tn, credit card balances were up US$24.0Bn to US$1.23Tn and student loans increased by US$15.0Bn to US$1.65Tn. Auto loan borrowing was stable, reported at US$1.66Tn.
• In a call with reporters, a New York Fed researcher added that "if you look at household balance sheets, overall, in the aggregate, they look pretty good, pretty strong." However, the researcher added that the current state of the economy, which has seen a softening in the labour market, could be an issue going forward. "The big question is, we are seeing some increases in the unemployment rate, especially amongst younger borrowers and as well as Black and Hispanic borrowers, so whether that will translate into a kind of a restart of an increase in delinquency rates, we have to see."
• The New York Fed's report said that during the third quarter, some 4.5% of all debt was in some form of trouble. Accounts just getting into trouble were mixed across borrowing types, while the share of those getting into serious distress was up across borrowing types outside of mortgage balances. Student loans, which have been troubled for some time after borrowers were forced to start repaying them, remained a source of trouble and showed the largest transition into serious delinquency during the quarter.

(Source: Reuters)