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Consumer Debt Dropped in the Second Quarter

August 14, 2013 by

Americans trimmed their overall indebtedness in the latest quarter, continuing a nearly five-year trend as mortgage balances fell further, data from the Federal Reserve Bank of New York showed on Wednesday.

Total consumer debt stood at $11.15 trillion in the second quarter, down 0.7 percent from the previous quarter, the New York Fed said in its quarterly household debt and credit report.

While student debt and auto loans rose, the country’s postrecession deleveraging cycle appeared intact as household delinquency rates dropped to 7.6 percent in the three months to June, from 8.1 percent in the first quarter of the year.

Americans have consistently deleveraged in the years since the housing collapse and financial crisis, and credit is now well below the peak of $12.68 trillion in the third quarter of 2008.

The Fed bank acknowledged the overall trend but highlighted a $20 billion increase in auto loan balances, the ninth consecutive quarterly rise, reflecting a rebound in a crucial sector of the American economy. Loan originations in this area reached $92 billion, the highest level since 2007.

“Although overall debt declined in the second quarter, households did increase nonhousing debt, led by rising auto loan balances,” Andrew Haughwout, a New York Fed research economist, said in a statement. “Households improved their overall delinquency rates for the seventh straight quarter, an encouraging sign going forward.”

Reflecting another national trend, student debt rose again, with outstanding balances up $8 billion to $994 billion in the second quarter. Still, student loan delinquency rates improved with 10.9 percent of loans behind by 90 days or more, down from 11.2 percent in the first quarter.

The report also showed outstanding mortgage balances fell by $91 billion to $7.84 trillion, while 1.5 percent of existing mortgages fell into delinquency. Mortgages are by far the largest segment of consumer debt.

Lenders made more mortgages, with originations rising to $589 billion.

Elsewhere, credit card balances edged up by $8 billion, while the number of credit account inquiries over six months, an indicator of consumer credit demand, was flat at 159 million.

Article source: http://www.nytimes.com/2013/08/15/business/economy/consumer-debt-dropped-in-the-second-quarter.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Consumer Debt in U.S. Fell by 0.7% Last Quarter

August 14, 2013 by

Americans trimmed their overall indebtedness in the latest quarter, continuing a nearly five-year trend as mortgage balances fell further, data from the Federal Reserve Bank of New York showed on Wednesday.

Total consumer debt stood at $11.15 trillion in the second quarter, down 0.7 percent from the previous quarter, the New York Fed said in its quarterly household debt and credit report.

While student debt and auto loans rose, the country’s postrecession deleveraging cycle appeared intact as household delinquency rates dropped to 7.6 percent in the three months to June, from 8.1 percent in the first quarter of the year.

Americans have consistently deleveraged in the years since the housing collapse and financial crisis, and credit is now well below the peak of $12.68 trillion in the third quarter of 2008.

The Fed bank acknowledged the overall trend but highlighted a $20 billion increase in auto loan balances, the ninth consecutive quarterly rise, reflecting a rebound in a crucial sector of the American economy. Loan originations in this area reached $92 billion, the highest level since 2007.

“Although overall debt declined in the second quarter, households did increase nonhousing debt, led by rising auto loan balances,” Andrew Haughwout, a New York Fed research economist, said in a statement. “Households improved their overall delinquency rates for the seventh straight quarter, an encouraging sign going forward.”

Reflecting another national trend, student debt rose again, with outstanding balances up $8 billion to $994 billion in the second quarter. Still, student loan delinquency rates improved with 10.9 percent of loans behind by 90 days or more, down from 11.2 percent in the first quarter.

The report also showed outstanding mortgage balances fell by $91 billion to $7.84 trillion, while 1.5 percent of existing mortgages fell into delinquency. Mortgages are by far the largest segment of consumer debt.

Lenders made more mortgages, with originations rising to $589 billion.

Elsewhere, credit card balances edged up by $8 billion, while the number of credit account inquiries over six months, an indicator of consumer credit demand, was flat at 159 million.

Article source: http://www.nytimes.com/2013/08/15/business/economy/consumer-debt-dropped-in-the-second-quarter.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Bucks Blog: African-Americans See Debt Reduction as Top Priority

May 21, 2013 by Leave a Comment

Paying down debt is the top financial priority for African-Americans, who have higher levels of debt — particularly, student loan debt — than the general population, a biennial survey from Prudential Financial finds.

While educational debt generally is becoming a cause for concern, it’s an issue of particular concern among African-Americans. College-educated African-Americans are twice as likely to have student loan debt, compared with all college-educated Americans, the survey found. While the student debt is a sign of economic progress, it also hampers the ability to invest or save for  retirement.

Prudential’s African-American Financial Experience survey was conducted by Gfk Public Affairs and Communications, from March 7 to 19, using a probability-based Internet panel. The survey included 1,153 African-Americans 25 to 70 years old, with household income of at least $25,000, who have primary or shared responsibility for household financial decisions. The margin of sampling error for African-Americans was plus or minus 5 percent.

The survey found that debt plays a major role in the financial lives of African-Americans, who are significantly more likely to have some type of debt (94 percent) compared to the general population (82 percent).

Credit card debt, student loan debt, and personal debt are all significantly higher in the African-American community. Debt is a major issue even for more affluent African-Americans, the survey found.

African-Americans have a median household debt of $18,000, not including home mortgages, which is about 50 percent higher than the household debt for the general population.

One in four African-Americans has felt anxiety or depression as a result of debt, the survey found.

When asked how they would use an extra 10 percent of income, almost half (48 percent) of African-Americans indicated their top priority would be paying down debt — a higher percentage than the general population.

The survey is one of a series of reports from Prudential examining financial trends in multicultural communities.

If you are African-American, please share your thoughts about debt — particularly student loan debt — in the comments section.

Article source: http://bucks.blogs.nytimes.com/2013/05/21/african-americans-see-debt-reduction-as-top-priority/?partner=rss&emc=rss

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Jobless Claims Fall Unexpectedly, Hinting at a Pickup

March 7, 2013 by Leave a Comment

The decline in jobless claims, released on Thursday, may foreshadow a strong report on February employment.

The figures were the latest to indicate the economy’s resilience amid higher taxes, although a separate report showing that the United States trade gap widened in January dimmed the near-term outlook a bit.

“Fundamentally, we are getting on a little better footing right now,” said Omair Sharif, an economist at the Royal Bank of Scotland in Stamford, Conn.

Initial claims for state jobless aid fell 7,000 last week to a seasonally adjusted 340,000, the Labor Department said. It was the second consecutive weekly decline, and it confounded economists’ expectations for an increase to 355,000.

The four-week moving average for new claims, a better measure of labor market trends, fell 7,000 to 348,750, the lowest level since March 2008.

On Jan. 1, a 2 percent payroll tax cut ended and tax rates rose for wealthy Americans. In addition, $85 billion in federal budget cuts took effect on March 1 that could slice as much as 0.6 percentage point from growth this year.

Economists were encouraged by the drop in claims. “It suggests that some jobs are being created, and there is income that is falling into the consumers’ pockets,” said Sam Bullard, a senior economist at Wells Fargo Securities.

In another sign of improving economic conditions, household debt grew at its fastest pace since early 2008 in the fourth quarter of 2012, the Federal Reserve said in a report. Consumers continued to increase their borrowing in January from December, adding $16.2 billion in debt.

Meanwhile, a separate report showed that worker productivity fell at its fastest pace in four years in the fourth quarter, but the decline was likely to be temporary as economic growth is expected to increase after stalling in late 2012.

“First-quarter growth is going to be substantially stronger than where we ended last year,” Mr. Bullard said.

The economy grew at a 0.1 percent annual rate in the fourth quarter. Growth estimates for the first three months of this year range as high as 2.8 percent, mostly reflecting an increase in the pace of business restocking.

The Commerce Department reported that the trade deficit widened to $44.45 billion in January from $38.14 billion in December. Exports fell, giving back the bulk of December’s gains, while imports rebounded after being depressed by disruptions to port activity in the previous months.

The inflation-adjusted trade deficit widened to $48 billion from $44.2 billion in December. Economists said this suggested that trade would be a small drag on first-quarter growth.

“The sharp deterioration in trade shaves a bit from the outlook for growth in the first quarter,” said Diane Swonk, chief economist at Mesirow Financial. “There are signs that domestic demand is firming, which would provide a major offset to weakness abroad.”

While the latest jobless claims data fell outside the period for the government’s report on February employment due on Friday, economists said they would not be surprised if job growth during the month beat expectations.

A Reuters survey of economists said employers probably added 160,000 jobs last month, a small increase from 157,000 in January. That would just be enough to hold the jobless rate steady at 7.9 percent.

Economists say job gains of at least 250,000 a month are needed to significantly reduce unemployment. Job growth averaged 200,000 in the three months through January.

Worker productivity fell at a 1.9 percent annual rate, the weakest pace since the fourth quarter of 2008, the Labor Department reported. A month ago it estimated that productivity, hourly output per worker, fell at a 2 percent pace.

It increased at a 3.1 percent rate in the third quarter. Economists polled by Reuters had expected the decline in productivity to be revised to a 1.6 percent rate.

The drop largely reflects a surge in hiring while output continued to expand at a slower pace. The economy added about 600,000 jobs in the fourth quarter, but gross domestic product grew at only a 0.1 percent rate.

Article source: http://www.nytimes.com/2013/03/08/business/economy/weekly-claims-for-jobless-benefits-decline.html?partner=rss&emc=rss

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