Americans are continuing their love affair with debt, says a new study from the Federal Reserve.
According to a new report from the United States central bank, household debt levels have surged to their highest levels since 2008 as households added $226 billion in debt in the fourth quarter of last year. The U.S. now has a total household debt of $12.58 trillion, which is just under the $12.68 trillion peak in the third quarter of 2008, a time when the financial crisis was unfolding.
Unlike during the previous economic collapse, the study notes, the soaring debt numbers are being driven by automobile and student loans rather than mortgages.
“Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt,” said Wilbert van der Klaauw, a senior vice president at the New York Fed, in the report.
Student debt rose by $78 billion for a total of $1.3 trillion. This is the second-largest category of household debt behind mortgages and is greater than auto and credit card debt.
The delinquency rate – payments that are past due 90 days – stood at 11.2 percent in the fourth quarter, up from 10.9 percent in the previous quarter.
The Fed added that Americans seem to be able to handle their debt levels for now as bankruptcies and foreclosures are at their lowest levels in 18 years.