According to the latest “Household Debt and Credit” quarterly report from the New York Federal Reserve Bank (NY Fed), Californians’ debt burden has reached the highest per capita level since 2008, and an increasing number of people are struggling to pay their bills on time.
In the first quarter of 2024, the per capita debt in California reached $86,940, slightly decreasing to $86,130 in the fourth quarter. In comparison, the national average per capita debt in the fourth quarter was only $50,540.
Joel Kotkin, Executive Director of the Chapman University Center for Demographics and Policy, mentioned that while families in other states are also struggling with bills, California’s debt figures may be higher due in part to the high cost of living.
He told the media, “The pressure may be greater due to the high cost of living.”
Kotkin also noted that bad habits coupled with a mediocre economic situation could mean more Californians opting to rent rather than buy a home or taking on more debt to purchase a house.
“They won’t buy housing like elsewhere, but if they do, their debt will be substantial,” Kotkin said.
Furthermore, the number of Californians unable to repay debts on time is on the rise. NY Fed data shows that in the fourth quarter of 2024, 3.25% of Californians were delinquent in their debt payments for 30 days or more, reaching the highest level in nine years.
According to a report by financial information website “Upgraded Points” in December last year, the Riverside-San Bernardino-Ontario metropolitan area in California had the highest credit card delinquency rate, with 15.2% being overdue for more than 90 days, ranking as the eighth highest in the country. Meanwhile, the San Jose-Sunnyvale-Santa Clara metropolitan area had the lowest delinquency rate in the U.S. at 6.3%.
Based on data compiled by personal finance company WalletHub in January, California ranked 11th nationwide in credit card delinquency rates at 21.58%. Additionally, a report by WalletHub in July last year indicated that Chula Vista City in San Diego County had the largest increase in credit card delinquency rate in the first quarter, reaching 85%.
According to the U.S. Bureau of Labor Statistics, California’s unemployment rate remained relatively stable from July to December last year, only slightly rising to 5.5%; however, the manufacturing sector saw a 3.4% decline in employment during the same period.
Not only has household debt in California seen an increase, but NY Fed data shows that total household debt in the U.S. increased by $930 billion in the fourth quarter of last year, reaching $18.04 trillion.
Additionally, by the end of the fourth quarter last year, the total mortgage balance in the U.S. reached $12.61 trillion, increasing by $110 billion compared to the third quarter.
Debts for auto loans, credit cards, and home equity lines of credit also saw slight increases last year. Particularly, auto loan debt increased by $110 billion in the fourth quarter, reaching $1.66 trillion. Credit card debt increased by $450 billion in the fourth quarter, totaling $1.21 trillion by the end of last year.