The US Consumer Debt Bomb

Those of you who know me are aware that I am something of a data junkie. I love to crunch numbers and look for trends. For years, I have worried about growing debt levels. Currently, the US government debt stands at approximately $21 trillion dollars. Few want to discuss that and I realize it is not exactly comparable to personal consumer debt. After all, the US dollar is the world’s reserve currency so, at times, we can print money to cover expenses and get away with it for a surprisingly long period of time.

Recently, the Federal Reserve released updated figures on household debt in the United States. The headline was that total household debt in the United States was projected to be $13.15 trillion. That certainly got my attention!

As any media strategist should be, I am something of a part-time demographer. So, I wanted to see how the debt was arrayed against different age groups in America. Results were a bit surprising and as follows:



Demographic           Average Household Debt

Under 35                      $67,400

35-44                            133,100

45-54.                           134,600

55-64                            108,300

65-74.                             66,000

75+.                                34,500


Source: Federal Reserve Bank of New York, 2018


A few issues popped out. The under 35 group was burdened by college loans. The average person owed $19,000 but often both husband and wife owe so the household college debt can be much higher. This debt is preventing many millennials from buying their first home nearly as early as their parents did. The 35-64 demos were about what I anticipated. People have mortgages and college bills plus notes on cars at that time of their lives. The surprise was 65-74 year olds and the 75+ demo. I assumed that it was for car loans. Nope. Many still had mortgage payments. Banks cheerfully write long term mortgages for people of any age if they qualify.  Admittedly, some upscale 65-74 have mortgage debt on second homes.


Why bother to bring this up? Well, the Great Recession or financial crisis began to take hold in earnest a decade ago. Once we struggled through 2009, many people said something like this to me—“People have learned their lesson. Look ahead 10 years. Millions will have cleaned up their personal balance sheets and will never get themselves in such a bad situation again.” Looking at the above data, I see that my friends were wrong. Household debt continues to grow. A rebounding real estate market did get many out of upside down mortgages (mortgage balance higher than current value of residence) but the overall debt levels continue to churn ahead.

Credit card debt continues to be annoyingly high. Again, the surprises came among those 65+. Here is the average revolving credit card balance by age group:

Under 35          $5,808

34-44                 8,235

45-54                 9,096

55-64                 8,158

65-69                 6,876

70-74                 6,468

75+                    5,638

I was quite taken by surprise that the average 75+ household with credit card debt owed $5,638!

So, despite our recent very solid growth of GDP of 4.1% for the last quarter, things are not so rosy for many people when you dig a bit. Are people borrowing more to purchase things and keep our 70+% consumer driven economy chugging along? It would appear so. An acquaintance dropped me an e-mail recently and said that he stole this line but uses it in meetings—“If you think the retail apocalypse is exaggerated, wait until the next recession comes along. People will not be able to meet their debt payments and storefronts will close all over America.”

So, what does this mean for the world of media? Even if my gloomy friend quoted is not entirely correct, it would appear that debt service will dig even deeper into discretionary income. So, people will likely watch more video as a result. You may cut the cord on cable but keep your Netflix subscription. Will you do without Amazon Prime? Probably not. So, Amazon Prime Video will take up more and more of your video viewing. HBO could grow stronger depending on what new owner AT&T does with it. And free You Tube will be cost effective for very inexpensive entertainment.

The world is not coming to an end. But when over 40 percent of Americans cannot handle a $400 car repair bill or trip to the emergency room, something has to give at some point.


If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com