Thursday, May 26, 2016

Household Debt Reaching Pre-Recession Peak, But Lower Debt Payments From Low Interest Rates

From The Wall Street Journal, "Trillions in Debt—but for Now, No Reason to Worry: U.S. household borrowing nears precrisis peaks; global debt has already topped 2008 levels" by Ken Brown:
Global debt has already topped 2008 levels and keeps rising. That’s pretty astonishing so soon after debt-driven crises in the U.S. and Europe and endless worries about too much borrowing in Japan, China and emerging markets.

But for all the hand-wringing, a near-term debt crisis is unlikely. Lower interest rates mean debt payments are far lower than they were before the crisis. In the U.S., household debt compared with the overall economy is way down. And overseas, loans can easily be rolled over.
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U.S. households owed $12.25 trillion at the end of the first quarter, up 1.1% from the end of 2015, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, released Tuesday. If the first quarter repeats itself through the end of the year, U.S. household debt will approach its peak of $12.68 trillion, which it hit in the third quarter of 2008.
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Source: The Wall Street Journal

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