The Federal Reserve Bank of New York just released new data on household debt, and WalletHub’s inflation-adjusted analysis revealed that while U.S. households owe a record amount, $17.7 trillion, in absolute terms as of the first quarter of 2024, total debt actually decreased by 0.8% compared to the previous quarter when adjusted for inflation.
The Household Debt Report by WalletHub, which provides consumers with credit monitoring and personal finance tools, adjusts data for inflation to provide what the company said is an accurate comparison against historical levels.
Highlights from the latest WalletHub Household Debt Report:
- Q1 Results: Total household debt decreased by $135 billion during Q1 2024, 6% less than last year.
- Household Average: The average household owed a total of $147,489 at the end of Q1 2024, only $13,694 below the all-time high.
- Total Debt to Deposits Ratio: Despite increasing recently, the ratio of total household debt to deposits indicates consumers are in good shape, as it’s still below pre-COVID levels and roughly 47% lower than its early 2000s peak, according to WalletHub.
- Total Debt to Assets: The ratio between total household debt and assets remains at a healthy level of around 9.8%.
“Despite rising in absolute terms from Q4 2023 through Q1 2024, U.S. household debt actually looks better now after adjusting for inflation, said John. Kiernan, WalletHub editor. “We owe around $135 billion less on an inflation-adjusted basis at the end of Q1 2024 than we did to start the year. If we don’t keep trending in a positive direction throughout the rest of the year, which is unlikely, we can expect household debt to set a new record high in both absolute terms and after adjusting for inflation by the time 2025 rolls around.”
“When you look at historical statistics for debt, assets and deposits, it’s clear that consumers are in good shape right now,” Kiernan continued. “While inflation is a significant headwind, it also provides an opportunity for people to rethink how they define necessities and luxuries, which can help strengthen household balance sheets even more.”
