A new report by the Federal Reserve Bank of New York shows mortgage debt fell for the first time in two years. That’s more than offset by overall debt shouldered by Americans that edged up to a record $13.5 trillion in the fourth quarter of 2018.
The overall debt rose consistently since 2013 when debt bottomed out after the last recession. According to a Reuters report, consumer spending accounts for two-thirds of the growth in the world’s largest economy and it is expected to hold steady this year even as the overall expansion cools after a hot 2018.
New York Fed economists said that while creditworthy borrowers are mostly driving the growth in originations, the performance of auto debt is worsening. “Growing delinquencies among subprime borrowers are responsible for this deteriorating performance, and younger borrowers are struggling most acutely to afford their auto loans,” said Joelle Scally, administrator of the New York Fed’s center for microeconomic data.