U.S. Consumer Debt Surpasses Financial Crisis Levels

Debt levels reached record levels during the Great Recession which struck the United States about a decade ago. Now, U.S. consumer debt has surpassed those levels with a record number of Americans living on the edge of disaster.

According to Market Watch, Ben Mohr, a senior research analyst of fixed income at investment consultant Marquette Associates, calculated that total U.S. consumer debt hit $14 trillion in the first quarter of 2019, surpassing the roughly $13 trillion of leverage accumulated in credit cards, auto loans, and mortgages and other debt back in 2008, when those souring loans and securities pegged to them helped to send global markets into a tailspin.

It appears that Americans’ appetite for more will never cease. Mohr told MarketWatch that the increase in student loans (often cited as a source of consternation for economists and strategists) saw a notable spike. At the end of the first three months of 2019, student loan debt hit $1.486 trillion, according to credit data from the New York Federal Reserve. By comparison, student loan debt at the height of the financial crisis was $611 billion. It has been rising incredibly since Mohr said. “It has ballooned and that’s a dramatic increase,” the fixed-income analyst said of the student-debt expansion.

Mohr also highlighted the ratio of debt Americans now carry. He estimated the ratio of debt compared against the U.S. population (estimated at 327 million according to U.S. Census Bureau data) translates to a record per-person debt ratio at $41.77, surpassing the ratio of $41.68 back in 2008. Mohr says consumer debt isn’t a huge concern just because the GDP (gross domestic product) is growing. However, he did fail to mention what happens as debt rises and there’s a sudden drop in GDP.  That would be a massive collapse.  Therefore, U.S. consumer debt is always worrisome, especially when it reaches historic levels.

Low interest rates have helped people to keep their debts repayable, even as most live paycheck to paycheck without enough in savings to cover emergencies.  This suggests that one small “blip” in this economy could send the house of cards crashing down.

This article has been contributed by SHTF Plan. Visit www.SHTFplan.com for alternative news, commentary and preparedness info.