Portrait of Americans' Finances: We Owe More Than Ever

Americans owe more money than they ever have before. The New York Federal Reserve on Tuesday shared that household debt increased to $16.15 trillion in the second quarter. It's the first time it's surpassed the $16 trillion mark, and represents a 2%—or $312 billion—rise over Q1, reports CNBC. In a press release, the NY Fed notes the amount owed is $2 trillion higher than at the end of 2019, just prior to the start of the pandemic. About two-thirds of the rise ($207 billion) was due to an increase in mortgage balances, which now sit at $11.4 trillion.

Credit card debt jumped by $46 billion in the quarter, and $100 billion over the last year. That's a 13% annual increase—the biggest in 20-plus years. Also on the credit card front, CNN reports that over the quarter, Americans opened 233 million new card accounts; that's the most since 2008. Auto loans balances were up $33 billion for the quarter, and other miscellaneous balances (retail credit cards, consumer loans) were up $25 billion. The one thing that didn't really budge: the $1.59 trillion student loan balance. All told, non-housing balances grew by $103 billion; that's the largest increase since 2016.

As for who is incurring the debt, an accompanying blog post from NY Fed researchers digs in: "Household debt is held overwhelmingly by higher-score borrowers, even more so now than it has been in the history of our data. ... The vast majority of mortgage balances are now held by borrowers with high credit scores. ... If we exclude mortgages and look at all other types of debt, we see a shifting of balances toward higher credit score borrowers, albeit a less dramatic one." CNBC notes that at the end of the quarter, 2.7% of debt was in delinquency; that's almost 2 percentage points lower than it was as the pandemic began in Q1 2020.

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As for inflation's role in all this, "The impacts of inflation are apparent in high volumes of borrowing," notes the blog post. CNN adds that inflation is also causing more Americans to draw from their savings. It cites the Bureau of Labor Statistics as determining the personal savings rate dropped to 5.1% in June; that's the lowest it's been since August 2009. (More debt stories.)