Household Debt Takes Biggest Leap Since 2007

And that might mean good things for the economy
By Kevin Spak,  Newser Staff
Posted Feb 19, 2014 10:04 AM CST
Household Debt Takes Biggest Leap Since 2007
In this Thursday, April 25, 2013, file photo, MasterCard credit cards are displayed.   (AP Photo/Toby Talbot)

US household debt spiked by $241 billion in the fourth quarter, up to $11.5 trillion, according to a new report from the Federal Reserve Bank of New York. It's the biggest increase seen since the financial crisis, and the first on a year-over-year basis. That might actually be a great thing for the economy, the LA Times reports. "The fact that people are borrowing more is a positive sign that they have more confidence in the economy and their jobs," one economist explains. "They're starting to buy homes and cars again. These are good things."

But the New York Fed's senior vice president was less confident. "Good or bad, it's hard to say," he told the New York Times. The increased borrowing could instead indicate that families are struggling. "The problem is you're not seeing job growth; you're not seeing wage growth," another analyst said. "We're still overleveraged by any historical measure." The debt increase was driven by mortgages and car loans—which are generally good signs—but student loans, which aren't, were the biggest risers with 5.2% growth. (More New York Federal Reserve Bank stories.)

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