According to the latest reports by the Federal Reserve, US consumer debt is up in 2013. During the month of January alone, debt was up $16.2 billion. This brings the national total to $2.8 trillion, a new record. The two largest contributors to this growth in debt are student and car loans. Fortunately, credit card debt stayed relatively stable and has been on a steady decrease since its 17.2 percent peak in June 2008.
Households Heal As Loans and Debt Rise
One of the most hopeful indications that the United State economy is still recovering is the growth of the net worth of American households, which rose $1.1 trillion to a total of $66 trillion. Analysts believe that because households are healing, confidence is increasing and people are willing to continue taking out loans and other debt.
All of this comes on the heels of reports showing improvement in the housing market, as well. Foreclosures are on a downward trend, especially in states like Texas where some areas have had their foreclosure rates cut by over half!
Since credit card debt stayed relatively stable, it seems reasonable to conclude that Americans are still cautiously exercising money management strategies to avoid credit problems. It’s still too soon to tell whether lower credit card debt is bad for the economy. One the one hand, higher consumer spending means that the economy is on a good track. More money spent means more jobs and higher incomes, which leads back to more spending.
However, increased debt also means that families could be taking out debt to make ends meet. Still, it’s a good sign that the majority of loans were student and car loans and that credit card debt has not risen.