Wolf Street: To the Fed’s great relief, hardy American debt slaves are finally going deeper into debt, after having made unnerving efforts in prior quarters at paying down their credit cards, the most expensive debts with the biggest profit margins for banks. What helped push up total borrowing were massive price increases that had to be financed – particularly homes and vehicles – and the loans to finance these purchases jumped even if the volume of purchases didn’t.
“The rich rules over the poor,
And the borrower is servant to the lender.” Proverbs 22:7
Total household debt – mortgages, HELOCs, credit cards, auto loans, student loans, and other debt – jumped by $313 billion in Q2, from Q1, according to the New York Fed’s Household Debt and Credit report today. This 2.1% jump was the biggest quarter-over-quarter jump in years, matching Q4 2013, and both were the biggest jumps since 2007. The total balance of debt reached nearly $15 trillion.
Auto loans & delinquencies: price spikes & stimulus checks.
The balance of auto loans and leases jumped by 2.4% in Q2 from Q1, to $1.42 trillion, the biggest quarter-over-quarter percentage increase since 2016, based largely on surging prices of new and used vehicles:
