Every quarter, the New York Fed publishes a report on Household Debt and Credit.
The report shows serious credit card delinquencies rose for the third consecutive quarter, a trend not seen since 2009.
Let’s take a look at a sampling of report highlights and charts.
Household Debt and Credit Developments in 2017 Q2
- Aggregate household debt balances increased in the second quarter of 2017, for the 12th consecutive quarter, and are now $164 billion higher than the previous (2008 Q3) peak of $12.68 trillion.
- As of June 30, 2017, total household indebtedness was $12.84 trillion, a $114 billion (0.9%) increase from the first quarter of 2017. Overall household debt is now 15.1% above the 2013 Q2 trough.
- The distribution of the credit scores of newly originating mortgage and auto loan borrowers shifted downward somewhat, as the median score for originating borrowers for auto loans dropped 8 points to 698, and the median origination score for mortgages declined to 754.
- Student loans, auto loans, and mortgages all saw modest increases in their early delinquency flows, while delinquency flows on credit card balances ticked up notably in the second quarter.
- Outstanding student loan balances were flat, and stood at $1.34 trillion as of June 30, 2017. The second quarter typically witnesses slow or no growth in student loan balances due to the academic cycle.
- 11.2% of aggregate student loan debt was 90+ days delinquent or in default in 2017 Q2.
Total Debt and Composition
Mortgage Originations by Credit Score
Auto Originations by Credit Score
30-Day Delinquency Transition
90-Day Delinquency Transition
Credit card and auto loan delinquencies are trending up. The trend in mortgage delinquencies at the 30-day level has bottomed. A rise in serious delinquencies my follow.
Mike “Mish” Shedlock
10% serious deliquences for student loans?
What private business could operate with those margins?
None.
Kids…
Its worse.
From the report:
“11.2% of aggregate student loan debt was 90+ days delinquent or in default in 2017Q2.”
For added measure.
From the report:
“As explained in a 2012 report, delinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are currently in
deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency
rates are roughly twice as high.”
Like the unemployment rate calcs. Move the sketchy loans into different category; actually any category except delinquent.
From zee internut:
What are deferment and forbearance?
If you meet certain eligibility requirements, deferment or forbearance allows you to temporarily stop making payments or to temporarily reduce your monthly payment amount for a specified period.
Easy debt impacts mass psychology and not in a good way.
Politicians couldn’t care less, only working for the next voting cycle.
Everyone else has to pick-up the pieces and clear-up the mess.
Discipline is lacking across the whole social order.
Student debt problem solved by ingenious millennial.
Incredibly naive. Economic ignorance is like an ineradicable weed.
The problem with the student loans is that the kids are naively taking out these loans, and thinking it is a reasonable thing to do. In some cases it is, but often they do not get their money’s worth, and they come away with no marketable skills, and no way to pay off the loans. The elites who run today’s universities exist to leech off these young people, and as a part of their “craft”, convince these naive young people they have the key to a bright new future. Do I have sympathy for these young victims? Not really – they are willingly going down this road. In the end the only solution must come from them. They are the ones that need to demand better education value, and marketable skills.
What choice do they have if they want to prepare for a profession like medicine or dentistry? You either roll the dice and take on debt, or you do not get to the starting line to compete. If it doesn’t work, there is a provision where after 20 years you can default on the debt and it is gone. You can always skip the country, and go on the dole in the EU for 20 years until the debt is discharged. Claim asylum for racism and sexism in the USA.
if only there were programs to get degrees with public or military service as the payment vehicle…oh…wait.
The real problem with student loans is the parents who let their children make irrational college choices without the long-term understanding and education of the effects of debt.
Time for the Fed to raise interest rates again…We need that extra push to bring this spending party to an end…
“Aggregate household debt balances increased in the second quarter of 2017, for the 12th consecutive quarter, and are now $164 billion higher than the previous (2008 Q3) peak of $12.68 trillion.”
…
Its worse.
If you count leasing and rent to own stores. Not technically debt. Per edmunds H1 2009 leasing 16.8% of new vehicle sales. H1 2017 31.1%. The spread easily in the hundreds of $billions … especially when you add in the gain in new vehicle prices since 2009.
https://static.ed.edmunds-media.com/unversioned/img/industry-center/analysis/2017-lease-report-july.pdf
Mish, Retail sales came in strong today, (over estimate).
Long Beach supposedly had it’s busiest month EVER. Now this about delinquencies. Can you please share any thoughts on all the mixed signals and if there is any way to make sense of all this? Thanks
I do not believe car sales. The rest, I do not know. Rate hike odds did jump today. That is at least consistent.
But, sure, Janet go ahead and raise interest rates …
Harvard’s anti-cash Ken Rogoff is saying that negative interest rates will be needed in the next major recession or financial crisis.
If I didn’t know better I would say there is a conspiracy to make neg rates mandatory amongst all major CBs next time round.
Meanwhile IMF warns China of its credit boom.
I have a feeling a LOT of those student loans are figuring on a Deus ex Machina ending where the loans are forgiven.
Well, the college faculty and staff want more tuition and pension padding so that will require more loans. They will start to teach the snowflakes that Deux ex Machina is a civil right that was forsaken them by the Republicans.
I suppose students could just reclaim it from where it was spent … ‘Finance student sues his maths teacher for costs that don’t add up, and his sociology prof. for opportunity denial ‘.
Seriously, these college educators should be subjected to claims of malpractice, as any other professional is.
Trouble is the system is installed from outside, and is clanish in nature. If you claim they are not working in good faith you are questioning a belief system, which is their speciality, right down to what words a prof. is allowed to use. ZH carried the story of the student photographed with Pence, taboo as far as campus is concerned, the list of this sort of dogma is endless… but that it gets people heavily into debt to fund and propagate itself is plain wrong.
Off Topic: Well Mish I guess now we’re going to have to take down the Washington Monument since the father of our nation had slaves. Then we’ll need to blast his face off Mount Rushmore and replace it with the face of 👀
http://dailycaller.com/2017/08/15/its-time-to-blow-up-mount-rushmore/
Editorial takes this to its logical conclusion.
so who is holding all this 12T debt?
The wealthy, connected and unproductive; funds that pay millions in fees to the wealthy, connected and unproductive; and funds that back 6 figure defined benefit pension plans for well connected, unproductive public unionistas.
IOW, those with preferential access to government, and whose social circle includes Fed officials. Hence, count on ever more rounds of bailouts, printing and negative interest rates. And ever more desperate screeching about that baddest of all imaginary hobgoblins, “the system will collapse!!! Oooooh!!!” As if that would be some sort of a bad thing.
Collapse wouldn’t necessarily be bad,,,but it would sure be messy.
As were slavery abolition, death camp liberation, and the creation of the US….
Tyrants don’t just walk away from their loot and privilege, without stirring up some noise on the way out.
Central banks can run with negative equity indefinitely. Since these bad loans are largely backed by the Fed the government is the one eating this bad paper. So once again we have private profits for banks making these loans and public absorption of losses again only now, unlike the bailouts, the process is institutionalized and designed to persist indefinitely. Watch for guarantee programs to be extended to Auto loans and even credit card debt.
If you meet certain eligibility requirements, deferment or forbearance allows you to temporarily stop making payments or to temporarily reduce your monthly payment amount for a specified period
The way things r going, credit and debt will be the least of our worries. I fear for the future. It looks like 38/39 all over again.
Fear is a dangerous emotion. Most often rooted in misperceptions.
There does seem to be a bit of an echo resonating with some…
“The report, titled ‘White Supremacist Extremism Poses Persistent Threat of Lethal Violence,’ found that US neo-Nazis ‘were responsible for 49 homicides in 26 attacks from 2000 to 2016…
MORE THAN ANY OTHER DOMESTIC EXTREMIST MOVEMENT,’
including Islamists inspired by ISIS or Al Qaeda.”
“There is no doubt that the FBI and DHS were heavily engaged in monitoring the actions of the fascist rioters in Charlottesville and had undercover agents active in their ranks. They would have been well aware of the danger of cars driven at high speed into crowds,
not only because this has been a well-publicized technique of ISIS-linked terrorist attacks in Europe,
but because an “All Lives Splatter” decal, threatening automobile attacks on demonstrators against police violence, has been widely circulated on right-wing and pro-police web sites.”
Selected quotes from “Mounting evidence of White House collusion with neo-Nazis”.
https://www.wsws.org/en/articles/2017/08/15/char-a15.html
Meanwhile Trump doubles down on his “both sides” position…
Seemingly unable to distinguish which is the greater of two evils.
ITMFA.
since fascism is a product of socialism, then yes, double down on “both” sides. Except…there is only one side and this entire problem is an intermural squabble between competing visions of socialism.
But, then, understanding that there is no difference between “democratic socialism” and “National Socialism” is hard and not spoon fed to us by the socialist media complex.
So, debt matters again? Why now, after 85 years of Keynesian money magic?
Seems to me, for debt to matter it needs to be denominated in something other than Federal Reserve Note Bearer Bonds,,,themselves debt instruments , i.e. Dollars.
Rest assured, as long as the present system lasts there will always be plenty of “Money.” It’s just it’s purchasing power that can’t be guaranteed. For that reason, never hold depreciating FRNs any longer than it takes to convert them into something real.
Hell, before this dog and pony show is over, the Fed might even need to buy Bitcoins to prop it all up. 😉
LMAO, …yep!!
When bombs are exploding all around you if you don’t experience fear Then you are mentally deranged.
And still Dudley feels that households are taking on enough debts!!
What is the Fed likely to do when it all comes down seems to be an interesting question? Negative interest rates, QE4EVER??
See Japan. Neg rates, fiscal steroids and debt monetization do not fix the economy — they have been trying and failing for 27+ years.
The question is whether the angry mobs in the USA will have the same respect for their elders as the Japanese do…
Consumers have hit the proverbial wall, and are tapped out, which is why Trump won the electoral college. Peak debt, Obamacare mandates, and Fed/DNC/local government collusion to raise consumer prices and taxes (sales, income, property) to new heights is simply sucking people dry. Wage stagnation from 2006 to 2017 means no relief from higher costs. Robert E. Lee statues in Charlottesville and Confederate war dead memorials do not need purging, and DNC Russia election hacking and collusion hoaxes do not need special persecutors. The problem is not millennials, Russia, white supremacists, racism, gender, irredeemable deplorables, Confederates statues, or slavery in the early 1800s USA. DNC is full of fart gas on this. Rather, a traitorous USA Senate needs to be thoroughly purged in 2018, so this country can flush Obamacare mandates down the toilet, cut taxes, and leave more money in the pockets of healthy people to buy goods and services and payoff debt. Very simple. No economic rocket science. Cut taxes and eliminate Obamacare mandates, and healthy people can go back to spending and paying off debt. No other way. Government can arrange charity (instead of pouring money into insurance company coffers) for the sick who need it.
When Humpty fell off the wall in 2008 it took $10T to put him back together again.
On the next fall he’s FUBAR.
We’re almost there.
If you are taking financial advice from the Eccles building, you are pretty fubar’d already
Only an economics PhD would advocate more debt when consumers already have too much debt.
– Inspite of Credit Card delinquencies rising the US Trade Deficit and the US Current Account keep growing. Seems the delinquencies are not yet eating into US demand yet.
http://www.calculatedriskblog.com/2016/09/trade-deficit-at-395-billion-in-july.html
Seems pretty straightforward to me, individual must wait 8 years between Chapter 7 filings.
Mish, I wonder why the fed has not disclosed the status of their mortgage debt obtained via QE? Is there a way to find out?
they disclose Fannie and Freddie debt – Agencies
Also the duration
Mish
Your ads are hanging my browser all the time now. Very annoying. “Long running script error”. You need to put some kind of technical limits in place on your advertisers. They are ruining the user experience of coming to your blog. There comes a point when it is just more trouble than it is worth…
So if the country is buried in too much debt, and some twits with economics PhDs tell everyone to borrow even more… that makes delinquencies go up?
Who besides the PhDs did not see this coming?