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Last Updated 3/27/2019
An alarming report by the Federal Reserve indicates American citizens collectively owe about $13.54 trillion in debt and that for the past four years individual debt has been rising. Compared during the height of the great recession in 2008, individual Americans collectively were $12.7 trillion dollars in debt.
The biggest red flag in the report is a record 7 million Americans are at least 90 days behind on their auto loan payments. It is an indicator that Americans are unable to pay bills despite indications of a strong economy and record low unemployment. Other indicators that our economy might be hitting a plateau over the next years are new home mortgage originations dropped 10% from $445 billion to $401 billion last quarter, which is a four year low. Homeowners who are over 90 days late stayed flat at 1.1%.
One of the most reliable recession indicators has also been triggered, which could mean the economy is slowing down. The US yield on the 10-year Treasury note last Friday dipped below the yield on the 3-month Treasury note. It has been the first time since 2007 that the yield curve has inverted. Historically if the yield curve remains inverted, a recession is likely to be triggered within the next two years.