Are We There, Yet?

The above chart is from the Federal Reserve Bank of New York publication that was last updated for the second-quarter 2018.

As the picture clearly reveals, non-housing debt is becoming a bigger chunk of overall household debt, as auto loans, credit cards, and student loan balances rise faster than mortgage debt (>$9 trillion). Job growth and shrinking savings rates have offset flat wage growth allowing for personal consumption to continue to rise, as was reflected in the latest GDP release.

However, how sustainable is this trend? What is the impact on saving for retirement? As we ask more from our workforce to fund, manage, and disburse a retirement plan (DC), is this rapid rise in consumer debt restricting one’s ability to put a few dollars away for later in life?

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