Despite COVID pause, Minnesotans are again living with debt

Every time Abigail Turner starts to catch up on her debt, something happens.

She listens to financial podcasts. She makes a budget. She spends carefully. And then an ER visit or a pet expense or a layoff pops up, and she’s behind again.

“It’s like having a rock around your ankle: Everything you do, you have to factor in this rock,” said the South St. Paul 29-year-old, who estimated she has about $50,000 in debt between student loans, credit cards and medical bills.

Turner is just one of the many Minnesotans struggling with managing debt. After declining early in the COVID-19 pandemic — when stimulus money and loan payment pauses buoyed personal balance sheets — U.S. consumer debt has swelled, with household debt reaching $17.5 trillion in the fourth quarter of 2023, up from $14.15 trillion in the fourth quarter of 2019, according to the Federal Reserve Bank of New York.

Nearly all states experienced an increase in per capita debt last year: In Minnesota, the total debt balance per capita in the fourth quarter was $62,680, up from $62,240 at the same time in 2022, the Fed data shows. Though that number has risen steadily in Minnesota since 2014, the data shows student loan and credit card balances declined between the fourth quarters of 2019 and 2020.

Consumer spending has stayed strong despite persistent inflation and elevated interest rates, but cracks are beginning to show, including an uptick in delinquency rates, declining personal savings and ballooning credit card debt. Mortgages comprise the lion’s share of the U.S. consumer debt balance, but it’s worrisome that credit cards are starting to eat up a bigger portion, said Tyler Schipper, an associate economics professor at the University of St. Thomas.

“I don’t think we’re at ‘credit card debt is a systemic risk to the economy’ yet,” he said. “But those types of revolving debts, I think, are unfortunate features of the…

Read More: Despite COVID pause, Minnesotans are again living with debt

2024-02-23 13:03:33

Notify of
Inline Feedbacks
View all comments