According to sources, Americans are now in tremendous debts as the total sum of the various forms of debts has now reached to a total of $14 Trillion.During the third quarter, the household debt rose by a total of 0.07%. This is the 5th consecutive year of the rise and is accompanied by low unemployment, lower interest rates and better customer confidence.
The total amount of consumer debt is nearly $1.3 trillion higher than the previous high that was set in 2008. These figures however have not been manipulated or adjusted according to the recent inflations and the increase in the size of the American economy. The household debt is now 25% higher than the amount during post recession period which totaled at $12.7 trillion.
Mortgages are still the highest part of the total debt in America and amounts to a massive $9.4 Trillion. After the end of the second quarter, it rose by 0.3% or $ 31billion. Student loans climbed by a total of $1.5 trillion or 1.4%. During the third quarter, credit card balances have also seen a rise of $13 billion in totality.
It may sound good for now but whenever the next recession hits and the unemployment is higher, these debts will become a lot harder to pay back. Currently all that debt, mortgages and credit cards are an instrumental part of the American economy.
Jerome Powell, who is the president of the Federal Reserve, has expressed his concerns on the rising amount of business debt however he indicated that he isn’t worried about the consumer debt right now.
At Capitol Hill, Jerome Powell told the lawmakers that household debt and income’s ratio is low as compared to the pre crisis levels at which the economy gets disturbed. He added that this ratio has been declining over the years, which is a good sign.