US household debt reached a record high in the first three months of this year, topping the previous peak reached in 2008, when the financial crisis plunged the economy into a deep recession.
Americans have stepped up borrowing over the past three years, yet the nature of what they owe has changed since the Great Recession. Student and auto loans make up a larger proportion of household debt, while mortgages - the epicentre of the financial crisis - and credit card debt remain below pre-recession levels. Those changes suggest households are still cautious about taking on debt to fuel day-to-day consumption.
The Federal Reserve Bank of New York said Wednesday that household debt, which also includes home equity lines of credit, stood at $12.73 trillion in the first quarter, above the $12.68 trillion outstanding in the fall of 2008, the previous record. The figure is not adjusted for inflation or population size.
Even with debt levels back to record heights, analysts note that household borrowing appears more sustainable now than it did nearly a decade ago. Interest rates are lower, and lenders are much more focused on credit-worthy borrowers.
"This record debt level is neither a reason to celebrate nor a cause for alarm," Donghoon Lee, research officer at the New York Fed said. "The debt and its borrowers look quite different today."
Measured as a percentage of the overall US economy, household debt is still smaller than in 2008. It is equivalent to 67 per cent of the economy now, compared with 85 per cent nine years ago.
Americans also appear to be better able to handle the loans they've taken out. The percentage of all household debt that is seriously delinquent - meaning payments are 90 days or more overdue - is 3.4 per cent, down from the post-recession peak of 8.7 per cent in early 2010.
Just 203,000 Americans declared bankruptcy in the first three months of this year, the lowest in the 18 years that the New York Fed has tracked the data.
