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After July’s jobs report and the Nasdaq correction, we’re all on extra-high alert for signs of consumer weakness. So when the New York Fed released its most recent look at household debt on August 6, we clicked on that report so fast that we understood what it must have felt like trying to buy Taylor Swift tickets last year.
When we opened the report, what we saw was…not terrible, actually.
Household debt did increase “moderately” in the second quarter, according to the report, with a 0.6% jump from the previous quarter. That’s 4.3% higher than the same period in 2023. Looking at shorter intervals, quarter over quarter growth in household debt has been slowing since the end of 2023.
As the New York Fed’s sister branch in Kansas City pointed out in May, growing debt doesn’t spell trouble on its own, and households’ low debt-to-income ratios are a sign that households aren’t taking on too much.
“Overall, there isn’t evidence of a retrenchment in consumer spending,” Gregory Daco, chief economist at EY-Parthenon, told the New York Times.
Red flags. While the share of past-due debt (3.2%) was flat, rates of delinquency went up a little for mortgages, auto loans, and credit cards. The bank focused on “elevated” rates of delinquency for auto loans and credit cards—8% and 9.1% of the total, respectively. (Mortgage delinquencies are still “low by historic standards,” the report said.) The share of credit card bills more than 90 days late rose to 7.2% in June, compared to 5.1% in Q2 2023, while so-called serious delinquencies among auto loans ticked up a half-percentage point to 2.9%.