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There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic. IMHO vehicles are hu

There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic. IMHO vehicles are huge drivers of debt. There are almost no cars under $30k now, and the average sale price of new cars is pushing up near $50k. This is for bog standard stuff like Hondas and Fords, not luxury cars. Used cars are incredibly expensive too. People are financing cars for well over 5 years now--I've heard of people on 6 and 7 year loans now just to make monthly payments possible. It's nuts.

gruez 3y ago
>IMHO vehicles are huge drivers of debt. There are almost no cars under $30k now, and the average sale price of new cars is pushing up near $50k. This is for bog standard stuff like Hondas and Fords, not luxury cars. I went on toyota.com and a base level corolla is only selling for $22,795. This includes a "Delivery, Processing & Handling" charge of $1,095. If for whatever reason you think that driving a compact car is beneath you, you can have a mid sized car (toyota camary) for only $27,515.
- helloooooooo 3y ago
  Now get a dealer to order that base Corolla from factory. Hint: it ain’t happening’.
- sylens 3y ago
  Exactly. It’s the SUVs and trucks that are suffering runaway prices. Driving a new Camry or Honda Accord is still doable
  - qbasic_forever 3y ago
    I just went to Toyota's site and mid range V6 Camry with a few options like navigation, driving assistance, etc. is over $45k sticker price. If you want a hybrid it's over $50k. For a Camry!
- kittensmittens 3y ago
  Toyota doesn’t sell direct to consumer. Good luck getting it at that price! Have fun hearing from salesmen when you call for the real price.
  - jonhohle 3y ago
    Having gone through this two years ago at the height of car unavailability, it really was take what was available. You don’t want that $50 first aid kit that comes in a canvas bag and has a few band aids in it? Too bad, you’re buying it. (I offered to sell mine to the sales person, but he wouldn’t bite.) don’t want the rails that could just be unscrewed by literally anyone at the dealership, too bad, $500. Fortunately, those were the only things we were stuck with. When Scion was around it was supposed to be customer driven, but the sales people were the same Toyota salespeople and couldn’t help themselves. Are treacherous people drawn to (car) sales or does sales make people treacherous?
    - djbusby 3y ago
      Nitrogen fill on the tires. Complete bullshit. It's a marketing company
      - porkbeer 3y ago
        For people who checking air in tires is not a habit, nitrogen will keep them full a bit longer. A bit scammy as sold, sure, but cars are optimized for minimal maintanice these days. For the unaware, common atmospheric air is like 80% nitrogen already.
        Scoundreller 3y ago
        Here I thought nitrogen filling was to avoid oxygen being pressed through into the rubber, reducing oxidation...
- qbasic_forever 3y ago
  Goooooooood luck driving off a dealer lot with a $22k Toyota! Seriously, if you can do it then good on you! But back in the real world the on the lot availability of cars is abysmal and most makes are sold out for months of backlog. Like if you want a Toyota minivan it's something like a 2 year wait--unless you are willing to buy one on the lot with a $10k dealer markup.
  - scarface_74 3y ago
    Then don’t buy a new car? Buy used.
    - nickjj 3y ago
      > Then don’t buy a new car? Buy used. In 1998 I bought a used 1989 Chevy Corsica for $1,800 all-in out the door. I'll admit I don't remember how many miles it had but it never had any major problems in all the years I drove it. There was a near unlimited sea of options for ~10 year old cars for around $2,000. In 2023, if you want a similar size 10 year old car (2013) a quick Googling suggests you'll be paying about $10,000 minimum for a car with 100-120k miles on it. Expect to pay $20,000 if you want a low'ish amount of miles (under 25k). Keep in mind this is the price on the website which you know will be more by the time you really purchase it.
      - 221qqwe 3y ago
        Car nowadays are significantly more reliable than back in the 80s so arguable a 10 year old car back in 1989 is the equivalent of a 15+ year one now. But yeah it's still quite a bit more expensive, $2,000 is equivalent to about $5,000 now.
        nickjj 3y ago
        > But yeah it's still quite a bit more expensive, $2,000 is equivalent to about $5,000 now. It's not quite that much. You calculated inflation off 1989 when the sale happened in 1998. An inflation calculator puts $1,800 @ 1998 being worth $3,375 @ 2023. It's a massive difference in how much more expensive an inflation adjusted car is nowadays.
- dharmab 3y ago
  Can you find one a dealer will actually sell you for that price? The lowest priced base models are usually only by special order, and dealers are charging thousands in markup (https://markups.org/search.html?title=toyota+corolla https://markups.org/search.html?title=toyota+corolla)
- bluGill 3y ago
  That is base. How many people buy the base model?
  - gruez 3y ago
    That's moving the goalposts, because the original claim was that "There are almost no cars under $30k now".
    - dharmab 3y ago
      The base models don't exist except for fleet sales right now. A regular consumer literally cannot buy one.
    - bluGill 3y ago
      The existence of one car under that price doesn't dispove anything. Almost no cars are under 30k.
      - gruez 3y ago
        >The existence of one car under that price doesn't dispove anything The corolla isn't some niche car. It's the 12th best selling car in america with 222k units sold per year. https://www.caranddriver.com/news/g39628015/best-selling-cars-2022/ https://www.caranddriver.com/news/g39628015/best-selling-car...
        bluGill 3y ago
        But there are models above the base.
- KindAndFriendly 3y ago
  Currently trying to buy a Corolla Hybrid (base). The best out-the-door quote I got so far is $28.5k, the MSRP is $23k. So yes, you are looking at almost $30k for the most basic car.
  - lotsofpulp 3y ago
    $30k for the highest quality most basic car. Other brands surely have cheaper basic options, and although I might not recommend going all the way to a Stellantis/GM car, a Ford/Honda/Mazda might be available for less and still be acceptable for quality.
    - mentalpiracy 3y ago
      Ford doesn’t even sell sedans anymore!
      - lotsofpulp 3y ago
        Wow, I stand corrected. Cheapest Ford is $30k+. I thought they would still have the Focus/Taurus still available.
        HDThoreaun 3y ago
        Ford's business is selling as many F150's as possible. Due to the way fuel efficiency regulations work in this country it makes sense for them to axe sedans from their lineup and replace them with large cars that can be classified as trucks because their more fuel efficient "trucks" can counteract the fine they would get from selling fuel inefficient F150s.
  - lapcat 3y ago
    > Currently trying to buy a Corolla Hybrid (base). I wanted to buy a Corolla Hybrid, but the wait list was ridiculous, something like 9 months. Toyota has major supply chain issues. I ended up getting a (non-hybrid) Honda Civic for under $30k. I still had to wait a month though.
- FormerBandmate 3y ago
  When’s the last time you bought a car? Going to the website literally only works for Teslas
- taway9021000 3y ago
  >> If for whatever reason you think that driving a compact car is beneath you Armchair economist-shoppers, I love them. The other day a guy told me housing in NYC was absolutely affordable. Managed to find a bedroom for rent at $2k/mo. Sure bro, let me stuff my family of four into a shared 1br apt and then have my kids share a bathroom with some random guy in the other room. Sure, i'd do this if I was desperate...but WTF would I want to aspire to this setup if I just spent 6yrs in college and went to a top Engineering CS program. Come on.
  - analognoise 3y ago
    I don't get the last part - nobody should have to put up with this. That's part of the problem - there are still some careers where people can "make it" and mentally say "well if you'd just done what I did, you'd be fine" I don't think that situation is fine for anyone, and we should reinforce that. It's just not ok. People stay in abusive relationships for housing, all kinds of negative shit. Nobody should be forced to live like that. We have the materials and the money; the system is broken.
    - deleted 3y ago
      [deleted]
- soupfordummies 3y ago
  I don’t understand why this whole thread is so in the weeds about NEW cars. New cars have never been considered to be financially prudent. Hard to sympathize with someone complaining about the prices when they’re choosing a 30k+ new car over a perfectly fine used model that costs half that.
- JeremyNT 3y ago
  And if you buy that car today and do basic routine maintenance there's a good chance it will still be running great a decade from now. Cars are dramatically more reliable than they used to be, so you will get more utility than you would for the same (inflation adjusted) expenditure 20 years ago. My vehicle is 16 years old and I have no intention of replacing it any time soon.
judge2020 3y ago
Credit card debt in the U.S. alone hit 1 Trillion https://www.cnet.com/personal-finance/credit-cards/credit-card-debt-in-the-us-hits-1-trillion-for-the-first-time-ever/ https://www.cnet.com/personal-finance/credit-cards/credit-ca...
- WalterBright 3y ago
  This can be a misleading statistic. A lot of people use credit cards as a substitute for cash, and pay off the balance every month. This is accounted as "debt" but in a practical sense it is not. Me, I use the credit card as a 6 week interest-free loan, plus getting the cash back discount.
  - djbusby 3y ago
    I thought the Fed only counted the carried balance. So folks who pay in full every month are not counted. I did a quick search but couldn't find anything definitive.
    - judge2020 3y ago
      I was able to find it by going from the cnet article to to the Fed's press release, then to the report, then the 'downloads' button, then the PDF[0]. in it: > Credit utilization rates (for revolving accounts). Computed as proportion of available credit in use (outstanding balance divided by credit limit), and for reasons discussed above are likely to overestimate actual credit utilization. 0: https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q2 https://www.newyorkfed.org/medialibrary/interactives/househo...
    - prepend 3y ago
      I would expect that they are only able to see the current balance. For me, I charge and pay every month so never pay interest. But my credit report always shows a 2-5k balance (or whatever I charged). Theoretically, if I paid off the balance BEFORE my statement period ends it would show $0, but I never do this because I have 25 days of 0% interest to pay, so I do. I don’t think credit reports track interest paid but that would be one way to track if it’s “real” credit card debt or people just cycling. But also you could look at average. I average $3k over the past 10-30 years or whatever. If this increased to some new stable level it would mean an increase in income. But if it increased at some rate or increased sporadically then it means I’m taking on more debt. So I expect if credit card debt increases in total it probably means more debt and not more people paying their balance in full each month.
JumpCrisscross 3y ago
> is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars Household debt to GDP is around at a multi-decade low [1]. Payments as a fraction of disposable income, similarly low [2]. Total debt is rising [3]. But non-housing debt rose 5.8% from Q2 2022 to the same quarter '23; that's about inflation. [1] https://fred.stlouisfed.org/series/HDTGPDUSQ163N https://fred.stlouisfed.org/series/HDTGPDUSQ163N [2] https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [3] https://www.newyorkfed.org/microeconomics/hhdc https://www.newyorkfed.org/microeconomics/hhdc
- hikingsimulator 3y ago
  GDP isn't a good metric to compare household debt to. The US has an incredibly unequal society (see Gini index) and a lack of welfare compared to other Western countries. In aggregate, it means that debt is likely higher for households where that matters. The poor.
  - JumpCrisscross 3y ago
    > GDP isn't a good metric to compare household debt to It's a fantastic metric to compare aggregate debt to. It isn't the end of the story, which is why I also cited debt payments to disposable income. American households are not, in aggregate, in a painful or even deteriorating position with respect to their debt. That doesn't mean many households, or even entire regions, e.g. West [1], aren't in pain. [1] https://usafacts.org/articles/the-state-of-household-debt-in-the-us/ https://usafacts.org/articles/the-state-of-household-debt-in...
    - hikingsimulator 3y ago
      Disposable income as an aggregate doesn't show a income-level class (my point). Unfortunately having up to date information on economic status given the income level is hard to get.
      - twoodfin 3y ago
adventured 3y ago
> There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic Consumer debt service payments as a percent of disposable personal income - is at 5.6%. In 2016 it was around 5.5%-5.6% - despite far lower interest rates. The same figure was 5.6-6% in the 1995-2000 years. Household debt service payments as a percent of disposable personal income - at 9-10% this year is at one of the lowest levels in 43 years. That figure was over 11% in the 1995-2000 years. The ratio of household debt to gdp is around 0.73%. That's lower than 2011-2019 years. US households are in fact in decent condition, despite a loud minority of people proclaiming the end of the world. The facts do not support the dire claims. Household assets in Q1 2023: $168 trillion. Liabilities: $19.6 trillion. $149t net worth. Household assets in Q1 2016: $106 trillion. Liabilities: $14.5 trillion. $91t net worth. In seven years US households added $62 trillion in assets against $5.1 trillion in liabilities. The US has gotten dramatically wealthier in the past seven years. That's how people are affording everything. US gdp per capita is $80,000 (with ~337 million people). That's nearly France + Britain combined. There is a vast underestimation of how much income the US has and how rich the US is. The US median household has a higher net worth than either Sweden or Germany. And the US household income and disposable income figures are typically among the highest in the world.
- riku_iki 3y ago
  > The US has gotten dramatically wealthier in the past seven years. That's how people are affording everything. top X% got dramatically wealthier.
- wonderwonder 3y ago
  This is pretty illuminating, thanks for posting it.
- danaris 3y ago
  > The US has gotten dramatically wealthier in the past seven years. If you believe this is true in a practical sense for the bottom half of income earners, then I've got a bridge to sell you....
- prepend 3y ago
koprulusector 3y ago
There are now officially 10 year car loans, 40 year mortgages.
- throwaway5959 3y ago
  In many cases, people getting 40 year mortgages would be better off just continuing to rent. We just bought our first home with 10% down and a 30 year note and we’re now basically paying rent to the bank.
  - porkbeer 3y ago
    Depends on the loan, with a baloon, sure. But equity is a good way to build wealth from what would otherwise just be an expense.
  - prepend 3y ago
    It’s pretty nice to be able to lock in a price for 40 years. Whereas rent will typically increase a few percent each year. So after 40 years, if you’re still there, rent will be 3-5x the original amount. Whereas mortgage payments with a fixed interest rate don’t increase so really only expenses like taxes and insurance increase over time. So after 40 years your monthly spend may be 1.5-2x. I’m expecting that eventually there will be an interest only perpetual mortgage where the principal never decreases so banks are basically just buying secured annuities based on the real estate collateral. Some countries have 99 leases that sort of operate like this and I thought it was strange that people would be willing to pay to purchase these leases where they never owned the property. But I guess some stability is better then none.
- qbasic_forever 3y ago
  That's wild to see 10 year car loans. But on the other hand I also saw some high-end Cadillacs are north of $150k brand new, so some folks are really going to do anything to conspicuously consume. I can't fathom spending so much money on a massively depreciating asset.
throw__away7391 3y ago
IMHO vehicles are the main reason Americans don't feel as rich as they actually are. I've spent the past year living in 22 countries in Europe, Asia, and South America and it's pretty clear in comparison that this is where the money is going. Americans have way, way more income than basically anyone else, but it's all going to cars and driving and the necessary infrastructure and costs associated.
- slowmovintarget 3y ago
  No, it's going to housing. Auto expenses are trivial, but housing, especially where the jobs are, is astronomically expensive. In the expensive housing markets, contracting prices (new roof, electrical, remodels, landscaping...) are all priced far higher than other places in the country.
  - throw__away7391 3y ago
    Housing is very much what I mean. The car-centric approach to life that the US takes dictates a very particular type of city construction and infrastructure to facilitate it. Single family homes require more land, low density housing costs quite a bit more to supply with power/water/sewage/roads. Even apartments in the US frequently feature parking and the streets for you to take your car and commute to work and back. As I said, it's quite apparent comparing the US to dozens of other countries, the amount of space dedicated to cars, huge parking garages. Every apartment I've lived in outside the US I've been closer to at least one grocery from my front door than a parking space I'd be likely to find in a US suburban shopping center would be. A two minute walk down a cobblestone street usually. When I was in the US I tried to stay in as "walkable" places as I could and (other than in NYC* ) I still needed to hop in a car and drive 5 minutes down usually a 6 (!) lane street, wait at no less than two traffic lights at large intersections. We are talking about around $15-20 million of infrastructure involved in my trip to the grocery, plus wear and tear on my car, gas, a parking garage at my apartment compared to some trivial amount to maintain a pedestrian walkway. You don't notice it when you live in the US because it's just part of the background. Not only are there the direct costs of the infrastructure, but the wasted space reduces available land and drives up prices significantly. * NYC is a special case, Manhattan is essentially the only walkable place in the country (and even there it falls short of global standards), the geography and history impose unique constraints, and the city draws a lot of people for reasons that aren't generally relevant when we're talking about the housing situation globally.
CalRobert 3y ago
Just moved to the Netherlands and being car-free covers something like half the rent alone. Nevermind that I don't have to deal with taking it to the shop, to get smogged, paperwork for reg and tax and insurance, etc. etc.

gruez 3y ago

>IMHO vehicles are huge drivers of debt. There are almost no cars under $30k now, and the average sale price of new cars is pushing up near $50k. This is for bog standard stuff like Hondas and Fords, not luxury cars. I went on toyota.com and a base level corolla is only selling for $22,795. This includes a "Delivery, Processing & Handling" charge of $1,095. If for whatever reason you think that driving a compact car is beneath you, you can have a mid sized car (toyota camary) for only $27,515.

helloooooooo 3y ago
Now get a dealer to order that base Corolla from factory. Hint: it ain’t happening’.
sylens 3y ago
Exactly. It’s the SUVs and trucks that are suffering runaway prices. Driving a new Camry or Honda Accord is still doable
- qbasic_forever 3y ago
  I just went to Toyota's site and mid range V6 Camry with a few options like navigation, driving assistance, etc. is over $45k sticker price. If you want a hybrid it's over $50k. For a Camry!
kittensmittens 3y ago
Toyota doesn’t sell direct to consumer. Good luck getting it at that price! Have fun hearing from salesmen when you call for the real price.
- jonhohle 3y ago
  Having gone through this two years ago at the height of car unavailability, it really was take what was available. You don’t want that $50 first aid kit that comes in a canvas bag and has a few band aids in it? Too bad, you’re buying it. (I offered to sell mine to the sales person, but he wouldn’t bite.) don’t want the rails that could just be unscrewed by literally anyone at the dealership, too bad, $500. Fortunately, those were the only things we were stuck with. When Scion was around it was supposed to be customer driven, but the sales people were the same Toyota salespeople and couldn’t help themselves. Are treacherous people drawn to (car) sales or does sales make people treacherous?
  - djbusby 3y ago
    Nitrogen fill on the tires. Complete bullshit. It's a marketing company
    - porkbeer 3y ago
      For people who checking air in tires is not a habit, nitrogen will keep them full a bit longer. A bit scammy as sold, sure, but cars are optimized for minimal maintanice these days. For the unaware, common atmospheric air is like 80% nitrogen already.
      - Scoundreller 3y ago
        Here I thought nitrogen filling was to avoid oxygen being pressed through into the rubber, reducing oxidation...
qbasic_forever 3y ago
Goooooooood luck driving off a dealer lot with a $22k Toyota! Seriously, if you can do it then good on you! But back in the real world the on the lot availability of cars is abysmal and most makes are sold out for months of backlog. Like if you want a Toyota minivan it's something like a 2 year wait--unless you are willing to buy one on the lot with a $10k dealer markup.
- scarface_74 3y ago
  Then don’t buy a new car? Buy used.
  - nickjj 3y ago
    > Then don’t buy a new car? Buy used. In 1998 I bought a used 1989 Chevy Corsica for $1,800 all-in out the door. I'll admit I don't remember how many miles it had but it never had any major problems in all the years I drove it. There was a near unlimited sea of options for ~10 year old cars for around $2,000. In 2023, if you want a similar size 10 year old car (2013) a quick Googling suggests you'll be paying about $10,000 minimum for a car with 100-120k miles on it. Expect to pay $20,000 if you want a low'ish amount of miles (under 25k). Keep in mind this is the price on the website which you know will be more by the time you really purchase it.
    - 221qqwe 3y ago
      Car nowadays are significantly more reliable than back in the 80s so arguable a 10 year old car back in 1989 is the equivalent of a 15+ year one now. But yeah it's still quite a bit more expensive, $2,000 is equivalent to about $5,000 now.
      - nickjj 3y ago
        > But yeah it's still quite a bit more expensive, $2,000 is equivalent to about $5,000 now. It's not quite that much. You calculated inflation off 1989 when the sale happened in 1998. An inflation calculator puts $1,800 @ 1998 being worth $3,375 @ 2023. It's a massive difference in how much more expensive an inflation adjusted car is nowadays.
dharmab 3y ago
Can you find one a dealer will actually sell you for that price? The lowest priced base models are usually only by special order, and dealers are charging thousands in markup (https://markups.org/search.html?title=toyota+corolla https://markups.org/search.html?title=toyota+corolla)
bluGill 3y ago
That is base. How many people buy the base model?
- gruez 3y ago
  That's moving the goalposts, because the original claim was that "There are almost no cars under $30k now".
  - dharmab 3y ago
    The base models don't exist except for fleet sales right now. A regular consumer literally cannot buy one.
  - bluGill 3y ago
    The existence of one car under that price doesn't dispove anything. Almost no cars are under 30k.
    - gruez 3y ago
      >The existence of one car under that price doesn't dispove anything The corolla isn't some niche car. It's the 12th best selling car in america with 222k units sold per year. https://www.caranddriver.com/news/g39628015/best-selling-cars-2022/ https://www.caranddriver.com/news/g39628015/best-selling-car...
      - bluGill 3y ago
        But there are models above the base.
KindAndFriendly 3y ago
Currently trying to buy a Corolla Hybrid (base). The best out-the-door quote I got so far is $28.5k, the MSRP is $23k. So yes, you are looking at almost $30k for the most basic car.
- lotsofpulp 3y ago
  $30k for the highest quality most basic car. Other brands surely have cheaper basic options, and although I might not recommend going all the way to a Stellantis/GM car, a Ford/Honda/Mazda might be available for less and still be acceptable for quality.
  - mentalpiracy 3y ago
    Ford doesn’t even sell sedans anymore!
    - lotsofpulp 3y ago
      Wow, I stand corrected. Cheapest Ford is $30k+. I thought they would still have the Focus/Taurus still available.
      - HDThoreaun 3y ago
        Ford's business is selling as many F150's as possible. Due to the way fuel efficiency regulations work in this country it makes sense for them to axe sedans from their lineup and replace them with large cars that can be classified as trucks because their more fuel efficient "trucks" can counteract the fine they would get from selling fuel inefficient F150s.
- lapcat 3y ago
  > Currently trying to buy a Corolla Hybrid (base). I wanted to buy a Corolla Hybrid, but the wait list was ridiculous, something like 9 months. Toyota has major supply chain issues. I ended up getting a (non-hybrid) Honda Civic for under $30k. I still had to wait a month though.
FormerBandmate 3y ago
When’s the last time you bought a car? Going to the website literally only works for Teslas
taway9021000 3y ago
>> If for whatever reason you think that driving a compact car is beneath you Armchair economist-shoppers, I love them. The other day a guy told me housing in NYC was absolutely affordable. Managed to find a bedroom for rent at $2k/mo. Sure bro, let me stuff my family of four into a shared 1br apt and then have my kids share a bathroom with some random guy in the other room. Sure, i'd do this if I was desperate...but WTF would I want to aspire to this setup if I just spent 6yrs in college and went to a top Engineering CS program. Come on.
- analognoise 3y ago
  I don't get the last part - nobody should have to put up with this. That's part of the problem - there are still some careers where people can "make it" and mentally say "well if you'd just done what I did, you'd be fine" I don't think that situation is fine for anyone, and we should reinforce that. It's just not ok. People stay in abusive relationships for housing, all kinds of negative shit. Nobody should be forced to live like that. We have the materials and the money; the system is broken.
  - deleted 3y ago
    [deleted]
soupfordummies 3y ago
I don’t understand why this whole thread is so in the weeds about NEW cars. New cars have never been considered to be financially prudent. Hard to sympathize with someone complaining about the prices when they’re choosing a 30k+ new car over a perfectly fine used model that costs half that.
JeremyNT 3y ago
And if you buy that car today and do basic routine maintenance there's a good chance it will still be running great a decade from now. Cars are dramatically more reliable than they used to be, so you will get more utility than you would for the same (inflation adjusted) expenditure 20 years ago. My vehicle is 16 years old and I have no intention of replacing it any time soon.

judge2020 3y ago

Credit card debt in the U.S. alone hit 1 Trillion https://www.cnet.com/personal-finance/credit-cards/credit-card-debt-in-the-us-hits-1-trillion-for-the-first-time-ever/ https://www.cnet.com/personal-finance/credit-cards/credit-ca...

WalterBright 3y ago
This can be a misleading statistic. A lot of people use credit cards as a substitute for cash, and pay off the balance every month. This is accounted as "debt" but in a practical sense it is not. Me, I use the credit card as a 6 week interest-free loan, plus getting the cash back discount.
- djbusby 3y ago
  I thought the Fed only counted the carried balance. So folks who pay in full every month are not counted. I did a quick search but couldn't find anything definitive.
  - judge2020 3y ago
    I was able to find it by going from the cnet article to to the Fed's press release, then to the report, then the 'downloads' button, then the PDF[0]. in it: > Credit utilization rates (for revolving accounts). Computed as proportion of available credit in use (outstanding balance divided by credit limit), and for reasons discussed above are likely to overestimate actual credit utilization. 0: https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/HHDC_2023Q2 https://www.newyorkfed.org/medialibrary/interactives/househo...
  - prepend 3y ago
    I would expect that they are only able to see the current balance. For me, I charge and pay every month so never pay interest. But my credit report always shows a 2-5k balance (or whatever I charged). Theoretically, if I paid off the balance BEFORE my statement period ends it would show $0, but I never do this because I have 25 days of 0% interest to pay, so I do. I don’t think credit reports track interest paid but that would be one way to track if it’s “real” credit card debt or people just cycling. But also you could look at average. I average $3k over the past 10-30 years or whatever. If this increased to some new stable level it would mean an increase in income. But if it increased at some rate or increased sporadically then it means I’m taking on more debt. So I expect if credit card debt increases in total it probably means more debt and not more people paying their balance in full each month.

JumpCrisscross 3y ago

> is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars Household debt to GDP is around at a multi-decade low [1]. Payments as a fraction of disposable income, similarly low [2]. Total debt is rising [3]. But non-housing debt rose 5.8% from Q2 2022 to the same quarter '23; that's about inflation. [1] https://fred.stlouisfed.org/series/HDTGPDUSQ163N https://fred.stlouisfed.org/series/HDTGPDUSQ163N [2] https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [3] https://www.newyorkfed.org/microeconomics/hhdc https://www.newyorkfed.org/microeconomics/hhdc

hikingsimulator 3y ago
GDP isn't a good metric to compare household debt to. The US has an incredibly unequal society (see Gini index) and a lack of welfare compared to other Western countries. In aggregate, it means that debt is likely higher for households where that matters. The poor.
- JumpCrisscross 3y ago
  > GDP isn't a good metric to compare household debt to It's a fantastic metric to compare aggregate debt to. It isn't the end of the story, which is why I also cited debt payments to disposable income. American households are not, in aggregate, in a painful or even deteriorating position with respect to their debt. That doesn't mean many households, or even entire regions, e.g. West [1], aren't in pain. [1] https://usafacts.org/articles/the-state-of-household-debt-in-the-us/ https://usafacts.org/articles/the-state-of-household-debt-in...
  - hikingsimulator 3y ago
    Disposable income as an aggregate doesn't show a income-level class (my point). Unfortunately having up to date information on economic status given the income level is hard to get.
    - twoodfin 3y ago

adventured 3y ago

> There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic Consumer debt service payments as a percent of disposable personal income - is at 5.6%. In 2016 it was around 5.5%-5.6% - despite far lower interest rates. The same figure was 5.6-6% in the 1995-2000 years. Household debt service payments as a percent of disposable personal income - at 9-10% this year is at one of the lowest levels in 43 years. That figure was over 11% in the 1995-2000 years. The ratio of household debt to gdp is around 0.73%. That's lower than 2011-2019 years. US households are in fact in decent condition, despite a loud minority of people proclaiming the end of the world. The facts do not support the dire claims. Household assets in Q1 2023: $168 trillion. Liabilities: $19.6 trillion. $149t net worth. Household assets in Q1 2016: $106 trillion. Liabilities: $14.5 trillion. $91t net worth. In seven years US households added $62 trillion in assets against $5.1 trillion in liabilities. The US has gotten dramatically wealthier in the past seven years. That's how people are affording everything. US gdp per capita is $80,000 (with ~337 million people). That's nearly France + Britain combined. There is a vast underestimation of how much income the US has and how rich the US is. The US median household has a higher net worth than either Sweden or Germany. And the US household income and disposable income figures are typically among the highest in the world.

riku_iki 3y ago
> The US has gotten dramatically wealthier in the past seven years. That's how people are affording everything. top X% got dramatically wealthier.
wonderwonder 3y ago
This is pretty illuminating, thanks for posting it.
danaris 3y ago
> The US has gotten dramatically wealthier in the past seven years. If you believe this is true in a practical sense for the bottom half of income earners, then I've got a bridge to sell you....
prepend 3y ago

koprulusector 3y ago

There are now officially 10 year car loans, 40 year mortgages.

throwaway5959 3y ago
In many cases, people getting 40 year mortgages would be better off just continuing to rent. We just bought our first home with 10% down and a 30 year note and we’re now basically paying rent to the bank.
- porkbeer 3y ago
  Depends on the loan, with a baloon, sure. But equity is a good way to build wealth from what would otherwise just be an expense.
- prepend 3y ago
  It’s pretty nice to be able to lock in a price for 40 years. Whereas rent will typically increase a few percent each year. So after 40 years, if you’re still there, rent will be 3-5x the original amount. Whereas mortgage payments with a fixed interest rate don’t increase so really only expenses like taxes and insurance increase over time. So after 40 years your monthly spend may be 1.5-2x. I’m expecting that eventually there will be an interest only perpetual mortgage where the principal never decreases so banks are basically just buying secured annuities based on the real estate collateral. Some countries have 99 leases that sort of operate like this and I thought it was strange that people would be willing to pay to purchase these leases where they never owned the property. But I guess some stability is better then none.
qbasic_forever 3y ago
That's wild to see 10 year car loans. But on the other hand I also saw some high-end Cadillacs are north of $150k brand new, so some folks are really going to do anything to conspicuously consume. I can't fathom spending so much money on a massively depreciating asset.

throw__away7391 3y ago

IMHO vehicles are the main reason Americans don't feel as rich as they actually are. I've spent the past year living in 22 countries in Europe, Asia, and South America and it's pretty clear in comparison that this is where the money is going. Americans have way, way more income than basically anyone else, but it's all going to cars and driving and the necessary infrastructure and costs associated.

slowmovintarget 3y ago
No, it's going to housing. Auto expenses are trivial, but housing, especially where the jobs are, is astronomically expensive. In the expensive housing markets, contracting prices (new roof, electrical, remodels, landscaping...) are all priced far higher than other places in the country.
- throw__away7391 3y ago
  Housing is very much what I mean. The car-centric approach to life that the US takes dictates a very particular type of city construction and infrastructure to facilitate it. Single family homes require more land, low density housing costs quite a bit more to supply with power/water/sewage/roads. Even apartments in the US frequently feature parking and the streets for you to take your car and commute to work and back. As I said, it's quite apparent comparing the US to dozens of other countries, the amount of space dedicated to cars, huge parking garages. Every apartment I've lived in outside the US I've been closer to at least one grocery from my front door than a parking space I'd be likely to find in a US suburban shopping center would be. A two minute walk down a cobblestone street usually. When I was in the US I tried to stay in as "walkable" places as I could and (other than in NYC* ) I still needed to hop in a car and drive 5 minutes down usually a 6 (!) lane street, wait at no less than two traffic lights at large intersections. We are talking about around $15-20 million of infrastructure involved in my trip to the grocery, plus wear and tear on my car, gas, a parking garage at my apartment compared to some trivial amount to maintain a pedestrian walkway. You don't notice it when you live in the US because it's just part of the background. Not only are there the direct costs of the infrastructure, but the wasted space reduces available land and drives up prices significantly. * NYC is a special case, Manhattan is essentially the only walkable place in the country (and even there it falls short of global standards), the geography and history impose unique constraints, and the city draws a lot of people for reasons that aren't generally relevant when we're talking about the housing situation globally.

CalRobert 3y ago

Just moved to the Netherlands and being car-free covers something like half the rent alone. Nevermind that I don't have to deal with taking it to the shop, to get smogged, paperwork for reg and tax and insurance, etc. etc.