Total household debt, including mortgages, credit cards and auto loans, fell by $78 billion in the second quarter to $11.15 trillion, the lowest level since 2006, according to a report released Wednesday by the Federal Reserve Bank of New York.The amount of bills 30 or more days late fell by $3.3 billion during the quarter, also reaching the lowest level in seven years.
The article traces this declining debt to the housing market. House values have gone up, allowing owners to profit from sales. Many Americans are also in a better position to pay down their mortgages.This is good news. When it comes to the national debt, many pundits make the mistake of equating households with nations. The latter can handle a good deal of debt, but debt is a huge drag on the former, and we’re excited to see that US households are bringing some of their debt under control.However, there’s still a lot of work to do, especially when it comes to student loans. As long as a college education remains both essential to securing a good job and increasingly expensive, student loans will continue to burden households. To build on all the good economic news, we need policy that can harness new technology to reign in student loans, health care costs, and other long-term drivers of debt.[Image of piggy bank courtesy of Shutterstock]