Latest U.S. Household Debt Figures Portend Deflation

The 2014 edition of Robert Prechter's Conquer the Crash warned:

Debt Levels … Portend a Deflationary Crash

The book goes on to remind readers that deflation nearly always manifests as a contraction in the amount of outstanding debt.

Here in late 2017, it appears that debt levels are even more precarious.

Read this excerpt from a Nov. 14 Fox Business article:

Delinquency rates have been creeping higher for certain loans in a sign some Americans are under growing financial stress as the total debt held by U.S. households hit a new high in the third quarter.

The Federal Reserve Bank of New York said Nov. 14 that household debt totaled $12.955 trillion last quarter, up 0.9% from the spring for a 13th straight quarterly increase. That was the most on record, though the figure wasn't adjusted for inflation or population growth. …

After years of deleveraging in the wake of the 2007-09 recession, household debt has risen more than 16% since the spring of 2013.

Some 4.9% of outstanding debt was delinquent as of Sept. 30, ticking up from three months earlier. Late-payment rates on the whole remain low, but flows into delinquency have risen in recent years for credit-card and auto debt.

One continued concern: The sharp rise in delinquency for auto loans made to subprime borrowers by auto-finance companies, usually through auto makers or dealers. …

Mortgages make up more than two-thirds of overall household debt and totaled $8.743 trillion in the third quarter, up $52 billion from the spring. Home-equity lines of credit, meanwhile, fell by $4 billion from the second quarter to $448 billion.

Auto loans outstanding jumped by $23 billion to $1.213 trillion. Auto makers in September and October reported strong sales partly because Texans, Floridians and others had to replace vehicles damaged by late-summer hurricanes.

Student loans rose by $13 billion to $1.357 trillion as the fall semester got under way at colleges and university across the nation. Credit-card debt was up by $24 billion to $808 billion.

You can read the entire article by following the link below:

Enter your email address to get email updates and special offers.
It's free!

* By submitting this form you authorize EWI to send regular emails and updates. You may unsubscribe from our mailing list at any time.