The credit rating agency DBRS released a new report on Thursday, November 30th that reported US consumer debt for the third quarter of 2017 at approximately $12.96 trillion, an increase of $116 billion over the second quarter of 2017. This increase is part of a pattern of the debt level continuing to increase throughout 2017 above the previous record high debt level established in 2008.
When you unpack all of the different types of debt Americans have, you see that while total mortgage debt has decreased since 2008, it still accounts for 67.5% of overall consumer debt. In addition, since 2008, auto loan and student loan debt have rocketed as auto loan debt increased by 50% to over $1.2 trillion and student loan debt grew by 122% to $1.357 trillion. Moreover, 90+ day delinquencies for student loan debt rose to more than 10%.
According to Zerohedge, more worrisome to DBRS is the added stress on households from wage stagnation that has helped to slow economic development. The rating agency cited the Harvard Business Review, which found that the “inflation-adjusted hourly wage has grown by only 0.2% per year since the mid-1970s and labor’s share of income has decreased to its current level of 57% from 65%.”
In fact, “in the second quarter of 2017, wages were only 5.7% higher than they were a decade earlier.” What has risen though, is US household debt which has “risen 60% faster than wages.”
As of mid-November, according to the Federal Reserve, the average American household carries a total of $137,063 in debt. With wages stagnating, median household income was just $59,039 last year, meaning many Americans are living beyond their means.
It hasn’t helped that the cost of living in the US rose 30% over the past 13 years, with the result being more American credit card debt to cover basic needs. These basic needs like food, housing, and medical costs have climbed between 30-50%. When you add together all of the household debt in America, you get a new record total of $13 trillion, according to the New York Federal Reserve.