US Household Debt Hits Record High Amid Slowing Consumer Spending

Americans are carrying unprecedented levels of household debt, and one of the nation's leading banks has issued a warning about a potential decline in consumer strength.

A recent report from the New York Federal Reserve reveals that US credit card debt has surged to a record $1.14 trillion. Overall, household debt—including student loans, mortgages, credit cards, and home equity lines—has reached historical highs.

The Fed’s report highlights a significant increase in aggregate household debt, which rose by $109 billion in Q2 2024, bringing the total to $17.80 trillion. This marks an increase of $3.7 trillion since the end of 2019, prior to the pandemic’s economic impact.

Additionally, the Fed notes a slight rise in delinquency rates for credit cards, auto loans, and mortgages, with approximately 4.9% of consumers having a third-party collection account.

Bank of America CEO John Moynihan has also commented on the situation, revealing that consumer spending has slowed dramatically. According to Moynihan, spending growth for the bank’s 60 million customers has dropped to just 3% in July and August, half the rate compared to the previous year. He suggests that while consumers are still employed and have funds in their accounts, their spending has significantly decreased.

Moynihan advises that the Federal Reserve must tread carefully to avoid excessively curbing economic growth, noting that current consumer spending levels are comparable to those from 2017 to 2019, reflecting a more stable economic environment with lower inflation.