Total debt jumped by $351 billion from July to September, the largest quarterly increase since 2007, bringing the collective household debt in the U.S. to a fresh record $16.5 trillion. That’s an increase of 2.2% from the previous quarter and 8.3% from a year ago. The largest contributors to that debt load came from mortgage balances, which rose $1 trillion from a year ago to $11.7 trillion, and credit card debt, which climbed to ~$930 billion. Credit card balances collectively rose more than 15% from a year ago.
At the same time, personal savings rates are at lows not seen since the years leading up to the great financial crisis and total personal savings are at $626 billion, down from over $4.8 trillion in the second quarter of 2020.
This effectively means households are still spending money, likely on more essential items like food and energy, that now cost more because of inflation. When you don’t have money in your bank account to pay for things that cost more you use credit cards and revolving credit.
This will cool inflation, if people can’t spend money anymore then there has to be less demand for goods and services, the very thing that kills inflation. It’s painful for some but beneficial to society as a whole.
How can we serve you? We invite you to contact us today so we can help answer any questions you may have about your financial situation.
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