February 23, 2024

Consumers in the U.S. continue to struggle to make payments as interest rates and inflation push households further into debt.according to new data According to data from the Federal Reserve Bank of New York, US household debt has reached US$17 trillion in the first quarter of 2023.

The research is based on the New York Fed’s Consumer Credit Panel, which draws data from anonymous Equifax credit reports, which provide valuable insights into the state of the economy and its impact on American households.

record debt levels

According to the Federal Reserve, total household debt balances increased by $148 billion in the first quarter of 2023, a 0.9% increase from the previous quarter. That brought the total balance to $17.05 trillion, up $2.9 trillion from before the pandemic-induced recession in late 2019. While growth in mortgage balances has been relatively modest, other forms of debt, including home equity lines of credit (HELOCs) and auto loans, have shown consistent upward trajectories.

The data also highlighted a reduction in mortgage originations in the first quarter of 2023, reaching the lowest point since the second quarter of 2014. However, auto loan originations remain high compared to pre-pandemic volumes. These insights point to possible shifts in consumer preferences and financial priorities, which could affect the development of new payment solutions and lending models.

The New York Fed also provides valuable data on delinquency rates and public records. While delinquency rates remained low and largely flat in the first quarter of 2023, early delinquencies for credit cards and auto loans increased.

Inflation – a global problem

We’ve covered before how credit card balances have risen in line with inflation, and how more and more Americans are struggling with higher costs and lower savings.

The cost of living is becoming a growing problem, not only in the US In the UK, for example, in order to keep up with the rising cost of goods, some people have to shoplift – or in many cases – buy instead, pay later (BNPL) service split their payments into smaller installments to help through this difficult time.