Comment by andsoitis
> consumer debt is at record highs.
While consumer debt is at or near historical highs, it is in and of itself not a problem (broader economic risk).
What you need to look at as well is debt burden ratios and repayment behavior, not just raw totals.
Household debt service ratio (the share of disposable income spent on principal + interest payments) is well below historical crisis peaks (e.g., 2007–2008), suggesting households are currently spending a smaller share of income on debt payments than in past stress periods.
While total household debt is at record levels (~$18 trillion+), debt as a share of income or GDP has not reached past crisis peaks like 2008. That means debt growth hasn’t outpaced income growth as dramatically as in previous crises.
However, delinquency rates, especially for credit cards and student loans, are elevated, nearing or exceeding long-run highs outside recessions.
Mortgage delinquency rates remain lower than unsecured debt categories, but have ticked up slightly. Because they're relatively stable, it mutes broader systemic risk for now.
Car loans.
"The percentage of subprime borrowers – those with credit scores below 670 – who are at least 60 days late on their car loans has doubled since 2021 to 6.43%, according to Fitch Ratings. That’s worse than during the past three recessions – during the Covid pandemic, the Great Recession or the dot-com bust."
"America’s current subprime delinquency rate is at the second-highest level since the early 1990s. The only time it was higher: this past January. Cars are being repossessed at the highest rate since the Great Recession of 2008 and 2009."