Household debt in the United States has hit the highest level since the 2008 financial crisis.
The average American household owed $142,860 at the end of 2022 according to an analysis by WalletHub, likely due to sky-high inflation and rising interest rates.
According to the report, there was approximately $320 billion more in total debt at the end of 2022 than the beginning of the year – which is 59 percent more than the average annual increase over the past 18 years.
As a result, the report found that US households collectively owed $17 trillion at the start of 2023.
“We’re not quite to the breaking point, but U.S. households can’t afford to take on too much more debt, especially if the economy takes a turn for the worse,” said Jill Gonzalez, a WalletHub analyst. “People should be thinking about how to shed debt and get in shape for a recession, not assuming a bit more debt will make no difference.”
The analysts also found that household mortgage debt increased by $290 billion in 2022, the second-highest annual increase since the end of the Great Recession.
“The average household had $100,667 in mortgage debt at the end of 2022 – $12,134 below WalletHub’s projected breaking point for mortgages,” the report states.
Fox News notes that “the data comes just a few days after new data from the New York Federal Reserve revealed that In the last three months of 2022, credit card balances increased by $61 billion to $986 billion. That smashed the previous high of $927 billion, recorded before the COVID-19 pandemic began.”
“The rise in credit card usage and debt is particularly concerning because interest rates are astronomically high right now,” the report continued. “The average credit card APR, or annual percentage rate, set a new record high of 19.14% last week, according to a Bankrate.com database that goes back to 1985. The previous record was 19% in July 1991.”
WalletHub’s quarterly household debt report is based on analysis of the latest data on consumer finances available from the New York Federal Reserve and the U.S. Bureau of Labor Statistics. Debt data is adjusted for inflation with data from the U.S. Bureau of Labor Statistics. Numbers differ from quarter to quarter due to the fact that the CPI constantly changes. CPI stands for consumer price index, and it is used to adjust data for inflation.