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Car Prices Drive Up Borrowing

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Abstract

Total household debt increased substantially during the second year of the COVID-19 pandemic, with a $1.02 trillion increase in aggregate debt balances, according to the Quarterly Report on Household Debt and Credit for the fourth quarter of 2021 from the New York Fed’s Center for Microeconomic Data. The yearly increase was the largest seen since 2007 in nominal terms and was boosted by particularly robust growth in mortgage balances, which grew by nearly $900 billion through 2021. Credit card balances, which have followed an unusual path during the pandemic, saw a large seasonal increase in the fourth quarter but remain well below pre-pandemic levels. And student loan balances increased only modestly through 2021 due to lower enrollment and also due to administrative forbearance on federal student loans—the smallest annual increase we’ve seen since 2004. Outstanding auto loan balances grew in 2021 by $84 billion. The $734 billion in newly opened auto loans through the year was the largest volume we’ve seen in our data.

Suggested Citation

  • Andrew F. Haughwout & Donghoon Lee & Daniel Mangrum & Joelle Scally & Wilbert Van der Klaauw, 2022. "Car Prices Drive Up Borrowing," Liberty Street Economics 20220208, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:93690
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    More about this item

    Keywords

    auto loans; Consumer Credit Panel (CCP);

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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