Rising Consumer Debt: Cracks Are Starting To Appear

When will rising consumer debt start holding back economic growth?

As consumer debt levels reach records, answering this question should be a priority for US policymakers if they want to stimulate the economy.

According to the latest Quarterly Report on Household Debt and Credit released today by the New York Fed’s Center for Microeconomic Data, total ousehold debt increased by $116 billion to reach $12.96 trillion in the third quarter of 2017.

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This headline figure camouflages problems emerging at the bottom of the market. Indeed, according to the report, the outstanding subprime auto debt now stands at about $300 billion. This amount has increased steadily in absolute terms but remained constant at 24% of the total outstanding auto loan balance since about 2011. There are over...