Federal Reserve Report Reveals Exploding Levels of US Household Debt

US household debt surged by $460 billion last year, the sharpest one-year rise in nearly a decade, according to a report released last week by the New York Federal Reserve. Total US household debt now stands at $12.58 trillion, almost as much in nominal terms as right before the 2008 financial crisis, which was triggered by the failure of the mortgage-backed securities market. The Fed’s report anticipates that this level will be surpassed sometime this year. Media reports have attempted to downplay the significance of the report by pointing to the fact that delinquencies and the share of personal disposable income swallowed up by debt servicing, as well as the level of household debt relative to GDP, remain well below their pre-recession levels.