Economy Watch: Consumer Debt Sees Uptick in 3Q

By Dees Stribling, Contributing Editor

Aggregate U.S. consumer debt increased by $127 billion in the third quarter of 2013, the largest increase since the first quarter of 2008, according to the New York Federal Reserve on Thursday. As of Sept. 30, total consumer indebtedness was $11.28 trillion, up by 1.1 percent from the second quarter of 2013. Overall consumer debt remains 11 percent below its peak of $12.68 trillion in Q3 2008.

Mortgages, the largest component of household debt, increased by 0.7 percent in the third quarter compared to the second quarter. Mortgage balances shown on consumer credit reports stand at $7.9 trillion, up by $56 billion quarter-over-quarter. Balances on home equity lines of credit dropped by $5 billion (0.9 percent) and now stand at $535 billion.

Non-housing debt balances increased by 2.7 percent, with gains of $31 billion in auto loan balances, $33 billion in student loan balances and $4 billion in credit card balances, according to the NY Fed. About 355,000 consumers had a bankruptcy notation added to their credit reports in Q3 2013, roughly flat compared to the same quarter last year.

FNC reports home price increases

The latest FNC Residential Price Index, which was released on Thursday, shows continued strong growth of U.S. home prices during the third quarter of 2013. The index, which measures price movement among non-distressed home sales, increased 2.5 percent between the second and third quarters, making the third-quarter growth the fastest in the current recovery.

Rising home sales and relatively low foreclosure sales were the key drivers of continued increases in home prices, according to FNC. As of September, foreclosure sales nationwide accounted for 13.4 percent of total home sales, up from August’s total of 12.7 percent, but down from 16.6 percent a year ago. Home prices are expected to grow at a more moderate pace in the coming months, as housing demand tapers off in the winter.

The FNC 100-MSA composite index, which is based on the sales of non-distressed properties (existing and new homes) in the 100 largest U.S. metropolitan areas, shows that September home prices increased from the previous month at a rate of 0.5 percent. In a sign of moderating month-over-month price momentum, September’s price increase has tapered off compared to July and August. On a year-over-year basis, home prices were up 6.2 percent.

Weekly unemployment claims dip

For the week ending Nov. 9, initial unemployment claims were 339,000, a decrease of 2,000 from the previous week, according to the U.S. Department of Labor on Thursday. The four-week moving average was 344,000, a decrease of 5,750 from the previous week.

Wall Street had another up day on Thursday, with the Dow Jones Industrial Average gaining 54.59 points, or 0.35 percent. The S&P 500 was up 0.48 percent and the Nasdaq advanced 0.18 percent.