Consumer debt passes $17T for first time

Total consumer debt rose to an all-time high in the first quarter of 2023, according to the Federal Reserve Bank of New York, with increases to mortgage balances, auto loans and student loans putting debt at a record level.

Consumer debt rose to more than $17 trillion for the first time ever, according to the data released by the New York Fed. The total represented a $148 billion increase from the previous quarter and a $1.2 trillion surge from last year.

The rise in debt was spurred on by a $121 billion climb in mortgage balances in the U.S., bringing total mortgage debt to just over $12 trillion. It was the most substantial growth in any category.

Auto loans increased by $10 billion over last quarter, totaling $1.56 trillion. Student loan debt increased moderately, to $1.6 trillion. Credit card debt remained flat, however, staying at $986 billion.

The rise in household debt comes as federal officials have continued raising interest rates as part of their fight to tame inflation. This month, the Federal Reserve again hiked interest rates by 0.25 percentage points despite fears of a recession, bringing rates to between 5 and 5.25 percent.

The hike was the 10th in a row since the Fed began its rate increases last March.

But the latest job numbers show that the U.S. economy is not cooling as quickly as federal leaders would like it to. In April, the U.S. added 236,000 jobs, beating projections and bringing the unemployment rate down to 3.5 percent, according to the Labor Department.

Annual wage growth did fall to 4.2 percent from 4.6 percent, as the Fed has tried to bring down wage increases to fight inflation.