US debt, housing and small-business indicators pointed in different directions
Household debt edged lower, home sales fell as the July price set a record, and small-business optimism rose. The three releases provide different views of the US domestic economy.
Economics & Markets··Night
Total debt declined as its composition shifted
Total US household debt fell by 13 billion dollars, or 0.1 per cent, in the second quarter to 18.8 trillion dollars, according to the Federal Reserve Bank of New York. Beneath that small overall decline, categories moved in different directions. Mortgage balances fell by 74 billion dollars to 13.1 trillion dollars, while credit-card balances increased by 21 billion dollars to 1.26 trillion dollars and auto-loan balances rose by 28 billion dollars to 1.71 trillion dollars. Some 4.7 per cent of outstanding debt was in a stage of delinquency, and the aggregate delinquency rate improved slightly. Transitions into early delinquency rose a little for auto loans and mortgages and were largely steady for credit cards. Mortgage originations remained near 505 billion dollars in the quarter, while new auto lending increased to 211 billion dollars. Bank economic-policy adviser Joelle Scally said delinquency rates across most products had been steady over the past 2 years, while new delinquencies for auto loans and credit cards remained elevated.[1]
Housing transactions fell as the July price rose
The July housing release provides another view beside the broadly steady debt total. Sales of previously occupied homes fell by 1.7 per cent from June to a seasonally adjusted annual rate of 4.06 million units, according to The Associated Press's report of National Association of Realtors data. That pace was slightly above economists' expectation of 4.05 million units, and sales were 0.7 per cent higher than a year earlier. The median sales price rose 2 per cent from a year earlier to 434,100 dollars, setting a record for the month of July. June's median of 442,800 dollars was the highest for any month in data going back to 1999. Prices have now risen year over year for 37 consecutive months. Freddie Mac said the benchmark 30-year fixed mortgage rate increased to 6.69 per cent in the prior week, its highest level in just over a year after a run of 5 consecutive weekly increases. The July picture therefore combined fewer monthly transactions with high prices and a rising mortgage rate.[2]
Optimism and uncertainty both rose among small firms
The small-business release offered a more upbeat direction in July. The Small Business Optimism Index rose by 2.4 points to 99.8 in the National Federation of Independent Business survey reported by ABC News 4, ending a 4-month period below its 52-year average of 98. A total of 8 of the index's 10 components increased, led by hiring plans. On a seasonally adjusted basis, one quarter of owners planned capital spending over the next six months. That share rose by 5 points from June and reached its highest level since December 2024. The survey's uncertainty measure also increased by 2 points to 91, compared with a historical average of 68. Taken together, the three reports reveal different parts of the US domestic economy rather than one uniform direction: the household-debt total edged lower, monthly housing transactions declined, and small firms' hiring and investment intentions strengthened. Because their populations and measurement windows differ, the results remain compatible. They separately illuminate households' existing obligations, current transactions in housing and businesses' plans for the months ahead.[1], [2], [3]
