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The Journal Gazette

  • At right, salesman Felipe Perdomo closes a deal with John Tsialas at a GMC Buick dealership in Miami last month. U.S. household debt is at a record high so far this year, and auto loans represent a bigger portion than in the past. (Associated Press)

Thursday, May 18, 2017 1:00 am

US household debt surpasses its 2008 peak


WASHINGTON – U.S. household debt reached a record high in the first three months of this year, topping the previous peak reached in 2008, when the financial crisis plunged the economy into a deep recession.

Americans have stepped up borrowing over the past three years, yet the nature of what Americans owe has changed since the Great Recession. Student and auto loans make up a larger proportion of household debt, while mortgages – the root of the financial crisis – and credit card debt remain below pre-recession levels. Those changes suggest that households are still cautious about taking on debt to fuel day-to-day consumption.

The Federal Reserve Bank of New York said Wednesday that household debt, which also includes home equity lines of credit, stood at $12.73 trillion in the first quarter. That's above the $12.68 trillion outstanding in the fall of 2008, the previous record. The figure isn't adjusted for inflation or population size.

Even with debt levels back to record heights, analysts note that household borrowing appears more sustainable now than it did nearly a decade ago. Interest rates are lower, and lenders are much more focused on credit-worthy borrowers.

“This record debt level is neither a reason to celebrate nor a cause for alarm,” said Donghoon Lee, research officer at the New York Fed. “The debt and its borrowers look quite different today.”