Between July and September, US household debt climbed to a new record of $15.24 trillion, the Federal Reserve Bank of New York said Tuesday. This could be the most debt Americans have ever been in.
It was an increase of 1.9%, or $286 billion, from the second quarter of the year.
So many families have been falling into poverty as federal aid in the form of stimulus checks ended.
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A study done by researchers at Columbia University’s Center on Poverty and Social Policy, found that the stimulus checks and enhanced jobless benefits lifted more than 18 million people out of monthly poverty in April.
The poverty rate fell from 11% in February to 9.3% in June, according to research conducted by professors at the University of Notre Dame, the University of Chicago and Zhejiang University in China.
The entire decline could be attributed to the one-time federal stimulus checks of up to $1,200 for eligible individuals and $2,400 for eligible married couples, plus $500 for each qualifying child, that were distributed in the spring.
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“As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic,” such as lower spending in favor of paying down debt balances, said Donghoon Lee, research officer at the New York Fed.
While Congress and the White House continue to discuss a new relief package, Democrats and Republicans remain divided.
Without the additional federal help, more people — particularly Black Americans, children and those with a high school education or less — fell into poverty over the summer.
The increases have been particularly severe for Black and Hispanic Americans, as well as for children, the Columbia study found. The monthly poverty rate for White Americans was 12% in September, but it was 25.2% and 25.8% for Black and Hispanic Americans, respectively.
Now, because regular consumers are more susceptible to debt because of their use of credit cards.
CNN Business reports that credit card balances rose by $17 billion, just as they had during the second quarter. But they’re still $123 bullion lower than at the end of 2019 before the pandemic hit.
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Mortgages, which are the largest component of household debt, rose by $230 billion last quarter and totaled $10.67 trillion. Auto loans and student loan balances also increased, rising by $28 billion and $14 billion, respectively.
Even though credit card debt has yet to get back to its pre-pandemic level, total debt is already $1.1 trillion higher than at the end of 2019.
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