Taps Coogan – August 19th, 2021

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The pace of consumer borrowing has hit its highest level since at least 2000, with consumers taking on $37.7 billion net debt in June and $36.7 billion in May, as the following chart from Bloomberg via Liz Ann Sonders highlights. Annualized Q2 net consumer debt growth clocked in at 7.5%.

The pre-Covid high in consumer debt was $4.217 trillion in February 2020. That number fell to $4.125 by May 2020 but is back to new record high of $4.318 trillion as of June.

With home and auto prices surging at a breakneck pace this shouldn’t come as too much of a surprise. The ‘silver lining’ is that household debt payments are actually declining as a percent of disposable income. Of course, that’s because of super lower interest rates and multiple rounds of indiscriminate stimulus payments, neither of which seem particularly sustainable.

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