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By Robert Donachie
U.S. household debt in the first quarter of 2017 topped levels reached during 2008’s Great Recession.
The total debt held by U.S. households grew to $12.73 trillion in the first three months of 2017, $50 billion above the previous peak in 2008, according to a report released Wednesday by the New York Federal Reserve Bank. The figure isn’t adjusted for inflation or population size.
Officials at the New York Fed say that while the figure is at historic levels, there is no reason to panic.
“This record debt level is neither a reason to celebrate nor a cause for alarm. But it does provide an opportune moment to consider debt performance,” research officer Donghoon Lee said in a statement. “While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types.
Borrowing, heavy use of credit and student loans are exacerbating household debt. “Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high,” Lee said.
As a share of the U.S. economy, household debt is still smaller than 2008 levels. Household debt is equivalent to 67 percent of the economy in 2017, compared to 85 percent in 2008.
One factor that does not bode well for repaying household debt is that so few Americans have significant savings for retirement.
The Bureau of Labor Statistics says that the median working age for an American adult is approximately 41.8 years of age for men and 42 years for women.
Less-than-stellar savings are not solely relegated to the younger workers of America. Americans nearing retirement have an average of just $17,000 in their 401(k) plans, MarketWatch reports.