The Rising Tide of Non-Housing Debt in America

The financial landscape of the United States has changed dramatically in recent years, with more emphasis on consumer debt. Americans Find Themselves In Almost $5 Trillion Worth Of Non-Housing Debt, The Latest New York Federal Reserve Report Shows That number, though staggering, represents an incredibly steep increase from 10 years ago.

Non-housing Debt

Non-mortgage debt refers to different financial responsibilities not associated with property. This can be credit card, student loans, car loan or even a personal loan. The increase in these types of debts points to shifts in consumer behavior and economic conditions which have taken place since then.

The Factors Behind the Increase

There is an assortment of reasons why this debt has taken hold. First, the price tag of college tuition has ballooned such that a good number of students are swimming in debt to earn their degrees. Further growing the debt crisis is that autos have become more expensive and people are beginning to use their credit cards.

In addition, the economic backdrop of a decade with varying levels of employment and wage growth that never kept up consistently to erode inflation. Therefore, to maintain a certain lifestyle borrowing among people rose.

The Consequences of Debt on the Rise

But the ramifications of an increase in non-housing debt are many-sided. For one thing it suggests consumer confidence, that people are secure enough in their jobs to borrow and make purchases. Similarly, this has the potential to reignite fears over financial stability as it raises questions about mass default en masse that can lead and economic wide ripple effects.

Sewn into ever-rising living and frozen wages, borrowers become increasingly desperate with every piling debt. That leads to a debt trap few can ever get out of.

Looking Ahead

IF WE ARE TO make progress going forward, blunting the impact of non-housing debt will be necessary for both consumers and policymakers. As such, a focus on programs around financial literacy initiatives; student loan reform in the point of use and take-back areas discussed earlier; and even promoting responsible borrowing would all help individuals better manage their debt.

We hope that this insight to the current debt situation will help Americans begin a journey towards lasting financial health. Properly-administered, these warnings hold the potential for reversing an unhealthy trend in non-housing debt and designing a stronger economy.