A report by the New York Federal Reserve states that in 2017, the U.S. is predicted to see the highest level of household debt it has seen in the past decade. The third quarter of 2008 holds the highest level of debt for the decade at $12.7 trillion and the current level of debt in the U.S. is about $12.6 trillion is fast approaching the previous record. Though some of this debt is still due to the economic recession of 2008, Wilbert van der Klaauw of the New York Federal Reserve asserts that “Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt.”
According to the report, debt today is mainly driven by increased student and auto loans. Prior to the recession, these two stood as marginal contributors to the increase in household debt. Over the past decade, student loan debt has more than doubled from $500 billion to $1.3 trillion, and auto lending growing from $800 billion to $1.2 trillion.
Policy-makers over the past few years have debated the future of student loan debt. However, recent reports demonstrate that auto-lending remains “abundantly available even to the riskiest borrowers,” also attracting the attention of regulators and lawmakers. Sky-high debt has the potential to affect consumers’ financial future, especially the ability of younger people to purchase homes.
Read more at the Wall Street Journal