After more than a decade, the amount of household debt (including mortgages) has surpassed pre-Great Recession levels. Sometimes, an upswing in debt of certain types can be a negative signal, such as rising credit card debt in an economic downturn as people try to deal with financial setbacks such as job losses. However, rising debt can also reflect economic strength as increasing numbers of households are willing and able to purchase big-ticket items such as homes and cars.
We recently passed a notable milestone in the long process of recovering from the Great Recession: household debt levels have surpassed the peak reached during the recession in 2008. In many ways, this rise in consumer debt is a good sign in that it indicates Americans are feeling optimistic enough to take on additional obligations. Moreover, housing markets and credit conditions have normalized to the point where mortgages are trending upward along with loan quality. On the other hand, it can be viewed in a somewhat more negative light in some respects, particularly given that one category responsible for significant growth is student debt which may not be providing adequate returns in terms of enhanced future earning capacity or other educational goals. Let's take a brief look at some of the salient points.