Americans took on $1.02 trillion in new debt last year, thanks to homes and cars

Two people receiving car keys.
(Image credit: Drazen Zigic/iStock.)

U.S. household debt increased $1.02 trillion last year, the most since a $1.06 trillion rise in 2007, The Wall Street Journal reported Tuesday.

Total consumer debt is now hovering around $15.6 trillion, versus $14.6 trillion a year ago.

The jump "is largely a function of a sharp rise in prices for homes and cars," the Journal writes. For example, the price of the average U.S. home rose almost 20 percent in 2021, while "rising prices for new and used cars drove auto-loan originations to a record $734 billion."

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That said, the increase in borrowing is not something of concern, economists for the Federal Reserve Bank of New York said. "Wealth increased across all income levels during the pandemic" and "delinquency levels on consumer loans are still hovering around record lows," the Journal notes.

As an added benefit, "some 87 percent of the new debt is tied to homes that can appreciate over time, allowing borrowers to build wealth," the Journal writes.

The news arrives as the Federal Reserve appears poised to raise interest rates to combat rampant inflation, CNBC notes.

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Brigid Kennedy

Brigid is a staff writer at The Week and a graduate of Syracuse University's S.I. Newhouse School of Public Communications. Her passions include improv comedy, David Fincher films, and breakfast food. She lives in New York.