NY Fed: Household Debt Climbs to $16.5T

New data from the Federal Reserve Bank of New York shows American household debt continuing to climb, with credit card balances jumping at their largest rate in two decades.

According to the Quarterly Report on Household Debt and Credit by the Fed’s Center for Microeconomic Data, household debt for the third quarter of 2022 rose 2.2% — or $351 billion — to reach $16.51 trillion.

Meanwhile, the report shows credit card balances rising by $38 billion, a 15% year-over-year increase that is the largest in more than 20 years. Mortgage balances increased by $282 billion in the third quarter to reach $11.67 trillion at the end of September, marking a $1 trillion increase from last year.

“Credit card, mortgage, and auto loan balances continued to increase in the third quarter of 2022, reflecting a combination of robust consumer demand and higher prices,” Donghoon Lee, Economic Research Advisor at the New York Fed, said in a Tuesday (Nov. 15) news release.

“However,” Lee added, “new mortgage originations have slowed to pre-pandemic levels amid rising interest rates.”

The report also found the share of delinquent debt increasing across nearly every type of debt, after “two years of historically low delinquency transitions.”

The pinch households are feeling will likely impact this year’s holiday shopping season, PYMNTS has found.

As we noted Wednesday (Nov. 16), 60% of U.S. consumers live paycheck to paycheck, a 4 percentage point increase from October 2022. Middle-income consumers saw the sharpest increase in paycheck-to-paycheck status, leaping 7 percentage points in the past year to 65%.

Our data also shows that 15 million — or 5.8% of — American consumers who shopped for holiday gifts last year have no plans to do so in 2022. Just 79% of consumers overall plan to purchase gifts for this year’s holiday season, representing a 10% decline from 88% in 2021.

Paycheck-to-paycheck consumers who have issues paying their bills are expected to see the steepest decline, with 17% fewer consumers in this category planning to shop this year.