Feb 12, 2020 - Economy & Business

U.S. household debt tops $14 trillion for first time

Illustration: Sara Grillo

Household debt increased by more than $600 billion last year, topping $14 trillion for the first time and marking the largest one-year jump since 2007, new data from the New York Fed show.

Why now? The growth was driven mainly by a large increase in mortgage debt balances, which rose by $433 billion.

Between the lines: More young people are taking on credit cards, and there has been an increase in delinquencies since 2016, "notably among younger borrowers,” Wilbert Van Der Klaauw, SVP at the New York Fed, said in a statement.

  • About 41% of eligible Gen Zers (those born in the mid-1990s or later) had a credit card last year, compared to 34% of millennials reaching the same age in 2012, according to a new survey from TransUnion, per Bloomberg.
  • The average 24-year-old last year, owed about $2,000 on credit cards, about one-third more than millennials at that age in 2012, the study found.

But, but, but: While total household debt has risen, the level of household debt service as a percentage of disposable income has fallen to an all-time low, according to St. Louis Fed data.

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Millennials' housing anxieties

Illustration: Sarah Grillo/Axios

A majority of millennials feel behind financially and are not optimistic about their financial future, according to a new survey from Bank of America.

Why it matters: Millennials are nearly twice as likely as baby boomers to worry often about their finances. Homeownership tops the list of anxieties — 20% say not being able to afford a home is the top financial stressor.

FICO score changes could hurt Americans already facing debt issues

Illustration: Aïda Amer/Axios

The creator of FICO credit scores is enacting changes in how it rates consumers' debt levels and their speed of repayment, the Wall Street Journal reports.

Why it matters: The decision, which impacts the most widely used credit score in the U.S., could lower the scores of those who fall behind on loan payments, sign up for personal loans or have rising debt levels, likely making it harder for many Americans to get approvals for loans.

Go deeperArrowJan 23, 2020

U.S. deficit projected to exceed $1 trillion in 2020

Illustration: Aïda Amer/Axios

The U.S. government's budget deficit is projected to top $1 trillion in 2020, according to the latest Congressional Budget Office report released Tuesday.

The big picture: If the projections pan out, this would be the first time since 2012 the deficit hit $1 trillion. In 2020, deficits are expected to increase from 4.6% of GDP to 5.4% in 2030 — growing to the highest sustained levels since World War II, according to the report.

Go deeperArrowJan 28, 2020