The economy is a constantly changing entity. While it's shown promise recently, there are consumer debt trends worth watching. Economists have been keeping close watch on subprime auto loans recently, and student loans are a frequent subject of debate.
Household debt continues to rise
The Federal Reserve Bank of New York recently noted that household debt levels have exceeded 2008 levels, the height of the pre-recession economy. As The New York Times reports, total household debt combines housing, credit, student and auto loans to measure how much Americans are borrowing. The idea is that heavy borrowing means households are financially secure and confident to risk new investment.
Pros of growing debt
While borrowing rates that compare to a pre-recession period may sound ominous, the ratios have changed since that distressed period. Americans are borrowing less in housing and more on education. They are banking on the philosophy that education leads to more long term income than a housing investment.
Cons of growing debt
On the negative side of the announcement, rising tuition costs are impacting the spending money of college graduates. This also negatively affects the housing market, because debt-burdened young adults are slower to purchase their own homes.
In addition to higher student loan debt, auto loans have increased in since 2008. Auto loan defaults are on the rise, the Times reports. Other analysts have noted a similar slowdown in loan repayment, with fewer subprime borrowers paying off their loans early.
A snapshot of the current economy
The reports suggest an optimistic picture, but with an eye of default trends. If you are having trouble collecting payment on delinquent accounts, consider contacting a trustworthy collection agency for information about how to recover on your investment with a borrower.