United States Household Debt Changes Composition

Household Debt in the USA

Household Debt in the USA

Morgan Stanley recently released some new data about household debt in the United States and there are some interesting changes. Prior to the global financial crisis, households in the United States continued to take on a lot of debt and mortgage debt was the major contributor.

As soon as the global financial crisis hit and the credit crunch followed, households started to avoid debt as much as possible with the one exception being those ever expanding student loans.

Now in 2014 there are some good signs for the economy including a willingness by consumers to go into debt for automobiles and to even go into debt for property again. While some people are going into debt, the majority are attempting to pay down their mortgage debts as soon as possible, after being panicked by the downturn and curbing their spending habits.

The growth in debt is still incredibly low, and the make up of the debt is very different to a few years ago. So while these signs of consumer confidence are encouraging, it is a different world post-GFC.

Also thanks to low interest rates, most Americans are in a better place in terms of paying back their debt burden. They can pay their loan more comfortably than almost anytime in the last decade or more.

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