New York Fed: Household debt rises by 0.9% in Q1, smallest gain in two years

Hey Carl, yeah, consumers giving their overworked credit cards a bit of a break in the first quarter. Household debt rising just 0.9% in the first quarter according to the New York Fed's Consumer of Household Survey of Household Finances. It's the smallest gain in two years. The credit card debt was flat following a big fourth quarter and a big third quarter surge. There was a 1% rise in mortgage debt that's the lowest since 2020 and debt transitioning into delinquencies. In other words, it wasn't delinquent.

Now it's 30 days delinquent or 30 to 60 to 90. It was up for most types of debt. However, when you look at the level of delinquency, the delinquency rates themselves remain below the pre-pandemic level. Guys, we don't know. Was this banks not willing to provide credit? Were they pulling back on credit to consumers? Was this consumers not willing to lend and trying to take a break in terms of increasing debt? We can't tell from that. We know that we had a better quarter in terms of the rise of debt than we've had the prior two quarters. So what's the takeaway, Steve? Because now we're reading every data point to figure out just what kind of credit tightening is going on, what exactly is happening with the consumer, has the jobs market starting to crack.

It feels like we're at an inflection point, but we don't know how severe of a turn we're taking. I think if you have two good reasons out there why credit growth might be a little bit lower, one is the availability of, in other words, banks raising their standards, and the other consumers after a big fourth quarter wanting to dial it back a little bit. Both of those make a bit of sense to me, so it's probably a bit of both. And again, Sarah, we are not a kind of recessionary, really troublesome levels. When it comes to delinquency rates, there's another slide in there about bankruptcies and foreclosures also being relatively low. The conclusion is we have to watch these numbers, that are we getting to a place where we're going to level off at normal delinquency rates, or is the playing going to keep going up to higher levels? That's what we have to watch right now. It's returning to normal, but also it was a good report here that consumers dialed back on credit growth.

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