US consumers take out record $211 billion in auto loans, Fed report shows

Card delinquencies 90 days past due reach 12.8%, up from 7.6% in late 2022

The quarterly report on household debt and credit, published alongside the Federal Reserve’s broader financial data, showed that mortgage and student loan balances saw a “small decline” during the April-to-June period, while increases appeared across other debt products including auto loans and credit cards.

An increase in credit card balances more than 90 days past due — from 7.6% in late 2022 to 12.8% early this year — had previously raised concerns about household stress at rates Fed researchers described as not seen since the Great Recession. The report noted that the pace of new delinquencies had remained stable for roughly two years.

The overall share of household debt held by borrowers who were behind on their payments fell slightly in the second quarter to 4.7% of outstanding balances, down from 4.8% in the prior quarter.

The report also showed that US consumers took out a record $211 billion in auto loans between April and June in nominal terms, the highest quarterly total on record.

High inflation has made it harder for many households to maintain their standard of living, according to Lucia Dunn, a professor emerita of economics at Ohio State University. Consumer prices rose 0.1% in July from a month earlier, according to a separate Consumer Price Index report released Wednesday, with prices on a year-over-year basis up 3.3%. The CPI report placed current inflation above levels recorded before the war with Iran.

“A lot of this is feeding your kids, going into stores, people buying their school supplies, the groceries, the baby formula, the diapers,” Dunn said. “I’m sure a lot of those people have to carry a balance because they are just simply strapped economically.”

Dunn distinguished between using a credit card and paying off the balance each month versus carrying a balance from month to month, noting that the latter carries greater risk, though it can serve as a buffer during job loss or unexpected expenses.

“A lot of it does have to do with the economy,” she said. “We’re sort of in hard times.”

“Having debt when there’s a downturn is very serious for people, and it can do a lot of harm,” Dunn added, pointing to the 2008 financial crisis as an example.