U.S. Unsecured Credit: The Next Bubble To Burst?

Clear warning signs signify that the overall U.S. consumer household debt is once again out of proportion to consumer income, according to new Aite Group report.

Boston, April 19, 2018 — Aite Group’s latest report, U.S. Unsecured Credit: The Next Bubble to Burst?, examines macroeconomic indicators that, 10 years later, look eerily similar to those that came before the financial crisis of 2008. In the months that preceded the financial crisis of 2008, U.S. household debt had just surpassed a new high of US$12 trillion, with nonhousing debt making up US$2.62 trillion. While the current housing debt remains relatively flat to the pre-recession numbers, the nonhousing debt has grown 31% in the last 10 years. The larger concern is that two-thirds of that debt, or US$2.21 trillion, is unsecured debt. This new report examines whether this could be a warning sign of a looming economic correction.

“Clear warning signs signify that the overall U.S. consumer household debt is once again out of proportion to consumer income,” explains Kevin Morrison, senior analyst at Aite Group. “Banks are increasing loan-loss provisions as delinquency rates continue to trend upward on unsecured debt. While some may take comfort in a stable housing market and strong economy, the younger generations appear to be accruing debt at an unsustainable pace without a clear understanding of how much credit costs and how long it will take to pay it off,” he adds.

This new Impact Note analyzes the current composition of and the trends in U.S. credit card debt based on a quantitative survey of U.S. consumers. The methodology employed for this research includes a U.S. consumer online survey representing 1,669 credit card users and Aite Group’s existing body of research as well as desk research of the overall credit card industry.

To request a press copy of this report or to speak with Kevin Morrison about this topic, please contact us at pr@aitegroup.com.

About Aite Group:
Aite Group is a global research and advisory firm delivering comprehensive, actionable advice on business, technology, and regulatory issues and their impact on the financial services industry. With expertise in banking, payments, insurance, wealth management, and the capital markets, we guide financial institutions, technology providers, and consulting firms worldwide. We partner with our clients, revealing their blind spots and delivering insights to make their businesses smarter and stronger. Visit us on the web and connect with us on Twitter and LinkedIn.

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