Household Debt Hits New Record High, Stocks Stumble
May 23, 2017
The Federal Reserve Bank of New York reported last week that US household debt reached a new all-time high in the 1Q of this year. The new report also included some troubling internal metrics, not only on the overall household debt levels but also with regard to the level of delinquencies. I’ll give you the details below.
On the same day that the Fed’s debt report was released, US stocks plunged lower in their worst day since last September. The surprise drop last Wednesday came just two days after the S&P 500 and the Nasdaq closed at new record highs. The Dow plunged 373 points, down 1.8% and the S&P 500 lost a similar amount.
Stocks cratered on the revelation (from an unnamed source) that former FBI Director James Comey apparently has a memorandum stating that President Trump asked him to call off the investigation into former National Security Advisor Michael Flynn. That, of course, sparked fears in some circles that the president might be guilty of “obstruction of justice,” and this set off talk of impeachment.
This in-turn led to fears that the president’s agenda – healthcare, tax reform, deregulation and infrastructure spending – could be off the rails. This combination caused the stock markets to tank, the volatility indicator (VIX) to soar by 40% and gold to spike – all in one day.
So there’s no shortage of things to talk about today. Let’s begin with the latest report from the Fed on household debt hitting a new record high in the 1Q.