Data from the Federal Reserve Bank of New York, analyzed by WalletHub, shows a complex picture of U.S. household debt. While Americans owed a record-breaking $17.7 trillion in absolute terms as of Q1 2024, inflation-adjusted figures reveal a 0.8% decline in total debt compared to the previous quarter.
Key findings from WalletHub’s Household Debt Report highlight the nuances of these trends:
- Quarterly Decline: Total household debt fell by $135 billion during Q1 2024, a 6% decrease compared to the same period last year on an inflation-adjusted basis.
- Average Household Debt: The average household owed $147,489, just $13,694 below the all-time high.
- Debt to Deposits Ratio: This ratio remains below pre-COVID levels and is 47% lower than its early 2000s peak, signaling strong consumer financial health.
- Debt to Assets Ratio: The ratio of total household debt to assets sits at a healthy 9.8%, reflecting stability in household finances.
“Despite the nominal increase in debt from Q4 2023 to Q1 2024, inflation-adjusted numbers reveal a more positive trend,” said WalletHub’s analysts. “If this trend doesn’t continue, we could see household debt hit new record highs in both absolute and inflation-adjusted terms by 2025.”
Experts also see opportunities for households to improve their finances despite inflationary pressures. “Rethinking what’s truly necessary and cutting back on non-essential spending can further strengthen balance sheets,” the report noted.
These findings offer a mixed outlook: while debt levels are high, historical metrics show consumers are managing their obligations better than in previous decades. For now, U.S. households remain in solid financial shape, even as they navigate rising costs.