Getting some breaking news out of the New York Fed. For that, we'll turn to Steve Leeman. Morning, Steve. >> Morning, Carl.Household debt, the third quarter New York Fed household debt and credit report, household debt uh balances rising uh by 197 billion. Call it 200 billion to 18.6% trillion. Uh that's a new record, but up only modestly.Mortgage and student loan and credit card debt all rose modestly. He locked debt up a little bit uh more actually a little bit elevated but auto loan debt which we've been ...

By Michael S. Derby (Reuters) -Overall U.S. household debt levels increased modestly in the third quarter as borrowing in some form of trouble stabilized and student loan woes increased, the New York Federal Reserve said on Wednesday. As part of its latest report on borrowing in the economy, the regional Fed bank said overall borrowing for the third quarter rose 1%, or $197 billion, from the second quarter, to $18.6 trillion. From a year ago, total borrowing was up $642 billion. Most categories of borro ...

Core Insights - The Federal Reserve's interest rate decisions are influenced by job creation data, with lower job additions potentially leading to rate cuts to stimulate economic growth [1] - Rate cuts can have a direct impact on consumer finances, particularly through reduced interest rates on variable-rate products like credit cards and loans [2][4] Group 1: Impact of Job Reports on Interest Rates - A jobs report indicating fewer positions added than expected may prompt the Fed to lower interest rates to encourage economic activity [1] - Lower interest rates can lead to increased consumer and business spending, ultimately boosting demand for labor [5] Group 2: Financial Benefits of Rate Cuts - Consumers with variable-rate debts, such as credit cards and car loans, will benefit from lower interest rates, resulting in reduced interest payments [4][5] - Fixed-rate borrowers may also find refinancing opportunities as rates decrease, allowing them to secure better terms on existing loans [6][7]

Core Insights - Investing $100 a month from age 25 to 65 in a growth stock mutual fund could yield $1,176,000 at retirement, potentially allowing for a comfortable retirement as a millionaire [2] - Carrying debt into retirement can undermine retirement savings, as high payments and interest rates can lead to financial struggles [3][4] - Debt is described as a significant barrier to building wealth, with cultural normalization of debt making it difficult for individuals to envision a life without it [4] Debt and Lifestyle - Many individuals live beyond their means, leading to debt accumulation that can persist into retirement [3][4] - Inflation is not a valid excuse for accruing debt; individuals are encouraged to adjust their lifestyles and cut expenses instead [5][6] - Debt can eventually catch up to individuals, particularly if they rely on it to maintain their lifestyle, leading to financial repercussions [7]

Core Insights - Many middle-class retirees face financial burdens due to ongoing monthly bills, which could have been mitigated with better financial decisions earlier in life [1] Group 1: Credit Card Debt - The average interest rate on credit cards reached 22.78% in Q2 of 2024, a near record high, making it difficult for retirees to manage debt [3] - A report indicated that 68% of retirees with debt have outstanding credit card balances, suggesting that addressing these debts earlier could have saved them thousands [4] Group 2: Mortgage Payments - Over 10.5 million Americans aged 65 and older still carry mortgages, which can limit financial flexibility during retirement [4] - The percentage of Americans aged 75 and over with mortgage debt rose from approximately 5% in 1995 to 25% in 2022, with the median amount owed increasing from $14,000 to $102,000 during the same period [5] Group 3: Car Loans - As of Q1 2025, average monthly auto loan payments were $745 for new cars and $521 for used cars, with auto loans constituting 33.3% of non-mortgage debt among retirees [6] - Many retirees regret making car payments for vehicles they do not need, especially when living on a fixed income [6] Group 4: Student Loan Debt - Baby boomers carry an average student loan debt of $43,554, with the number of adults aged 60 or older with student loan debt increasing sixfold over the past two decades [7] - The total amount of student loan debt for this age group has multiplied nearly 20 times, indicating a significant financial burden for many retirees [7]

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