Consumer debt hits record $16.9Trn as delinquencies also rise  

• U.S. household debt jumped to a record $16.90Trn from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday.
• Household debt rose by $394Bn last quarter and is now $2.75Trn higher than just before the COVID-19 pandemic began. Mortgage debt increased by $254Bn to $11.92Trn at the end of December. Meanwhile, credit card balances increased by $61Bn in the fourth quarter while auto loan balances rose by $28Bn, the report said.
• Much of the rise in overall debt can be attributed to a tumultuous 2022 in which the U.S. central bank raised its benchmark interest rate from near zero last March to more than 4% by the end of December, the fastest pace of monetary tightening since the early 1980s, as it fought to quash an inflation rate that had surged to a 40-year high.
• Delinquency rates rose too for credit cards, auto loans, and mortgages, although the overall share of debt in arrears by more than 90 days remains below pre-pandemic levels for now. However, younger borrowers appear to be struggling more to make repayments for both credit card and auto loans.
• "Although historically low unemployment has kept consumer's financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts," said Wilbert van der Klaauw, an economic research advisor at the New York Fed.

(Source: Reuters)