- the source for market opinions


February 13, 2018 | Deleveraging? Not Quite: Household Debt Quarterly Report

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
 The Fed’s household debt quarterly report shows no aggregate deleveraging although mortgage debt is below the 2008 peak.

The Fed’s Quarterly Report on Household Debt and Credit show overall debt hit a new high in the fourth quarter of 2017.

The composition of the debt has changed. Mortgage debt is still below the 2008 peak.

Aggregate household debt balances increased in the fourth quarter of 2017, for the 14th consecutive quarter, and are now $473 billion higher than the previous (2008:Q3) peak of $12.68 trillion. As of December 31, 2017, total household indebtedness was $13.15 trillion, a $193 billion (1.5 percent) increase from the third quarter of 2017. Overall household debt is now 17.9 percent above the 2013Q2 trough.

Number of Accounts by Type

The number of auto loan accounts well exceeds the 2008 peak, while the number of mortgage loan accounts is well below the previous peak.

Mortgage Originations by Credit Score

Credit Score Percentiles

Credit scores show how the housing bubble formed. Things are comparatively benign now.

Auto Loan Scores

Auto loan scores have improved since 2008 but they represent a problem area.

Percent of Balance 90 Days or Over Delinquent

Auto loan delinquencies are on the rise. I believe those student loan numbers are massaged.

Total Balance by Delinquency Status

That chart looks as if it’s in a bottoming process. Rising interest rates, rising rent, and rising medical expenses will eat up every bit of wage gains.

Mike “Mish” Shedlock

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

February 13th, 2018

Posted In: Mish Talk

Post a Comment:

Your email address will not be published.

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.