Is Household Debt in the U.S. really a bigger problem than before the financial crisis?

There are various ways to look at Household Debt (total debt outstanding including mortgages, loans, credit cards and other debt) in the United States, we look at two today.

The first is debt servicing costs to disposable income which effectively is how much it costs to service household debt as a fraction of disposable (after tax) income. The second is household debt outstanding to disposable income which effectively is how much debt there is with respect to the same disposable (after tax) income measure.

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Delinquency and Charge-off rates across banks in the United States remain low (January 2019 edition)

We answered the question whether bad loans were really increasing for banks in the United States at the end of December. We look at Delinquency and Charge-off rates across banks for United States across different products in this post.

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UK household credit growth remains robust despite Brexit as outstanding household debt hits 80% of GDP

Household credit growth has been slowing around most of the world including the United States, Canada and Australia but remains robust in the United Kingdom despite economic concerns around Brexit. Household debt excluding student loans has hit 80% of GDP and including student loans has hit 90% of GDP.

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European Union Statistics for Total Debt to GDP, Banking Non-Performing Loans and Loan to Deposit Ratio

European Union Debt to GDP

European Union total debt (Debt of general governments and the private sector) as percentage of GDP is now over 300%. Ireland’s total debt to GDP is an eye watering 450%. A decade ago the EU total debt to GDP was 180%, the debt bubble is well and truly here.

EU deEU debt to GDP in each member country

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The UK just changed the way they account for student loans which means the UK will likely have a fiscal deficit at least until the 2040s

The UK’s higher education funding system is unique in many ways and a change today is quite significant in terms of fiscal accounting. Firstly, here’s a timeline of the student loan system in the UK.

UK Student Loan Policy Timeline

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Household credit growth in Canada is slowest in 35 years but outstanding household debt stands at over 125% of GDP and individual debt is already 175% of disposable income

Households in Canada are accumulating debt at the slowest pace in 35 years as interest rates continue to rise. Household credit growth has slowed to 3.5%, the slowest since 1983.

Canada Household Credit Growth Rate November 2018
Source: Bank of Canada

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Australian credit growth is slowing with Investor housing credit growth slowest ever, Broad Money Supply growth slowest since the last recession 26 years ago

Australian credit growth is slowing but outstanding debt remains at historically high levels. Housing credit growth, personal credit growth, investor housing credit growth and business credit growth are all slowing. But the rather surprising thing is broad money (M3) supply growing at a 12-month rate of just 1.9%, the slowest since 1992 when Australia faced eight consecutive quarters of declining economic growth.

Australia Broad Money M3 12-month growth rate until July 2018
Data Source: Reserve Bank Of Australia

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