Bubble watch: Will Californians continue to pay their debts?

Bubble Watch” digs into trends that may indicate economic and/or housing market troubles ahead.

Buzz: Californians may have huge debts, but they’re apparently making loan payments better than most Americans.

Source: My trusty spreadsheet analyzed the Federal Reserve Bank of New York’s quarterly study of credit files. The data includes the size and payments of consumer debts in 11 big states and the nation through June 2022 quarter. These stats look only at people with credit histories — a sizable but not complete slice of the population. Debt levels are tracked as a per-person average.

The trend

Just how big are California consumer debts?

Well, they equaled $81,360 per person in the spring — that’s 42% above the $57,320 U.S. average. It’s also well above California’s economic rivals — 56% higher than Texas’ $52,160; and 50% above Florida’s $54,190.

Here are 36 reasons why California’s so darn expensive

But most Californians are paying off that mountain of debt on time. Just 1.25% of borrowings were more than 90 days delinquent in the spring quarter. That’s down from 2.17% late on average in pre-pandemic 2015-19.

And that’s better than the national norm, which saw 1.81% of debts going unpaid in spring vs. 3.34% in 2015-19. Florida had 2.41% late in spring vs. 4.76% in 2015-19, while Texas was 2.44% late in spring vs. 3.80% in 2015-19.

The details

Let’s be honest, debt is an odd economic factor to track. Too little can be bad but too much is often troublesome.

For example, last year’s rebounding economy gave folks the confidence to borrow. This year, rising inflation has forced some households to borrow to help pay bills.

And so far in the ever-surprising pandemic era, consumers across the nation have been improving repayments while borrowing aggressively.

No matter the reasons, California’s debts grew at a 5.7% annual pace since the end of 2019. That’s a steep increase from averaging 2.2% growth in 2014-19.

The state is no anomaly. Debt nationwide grew at a 5.3% annual pace in the pandemic era vs. 2.5% before. Texas? 7.3% pandemic growth vs. 4.4% before. Florida? 6.9% vs. 3.5%.

Lofty home prices are certainly a big slice of why Californians have so much debt — $65,440 in mortgage debt per capita at mid-year 2022. That’s 61% above $40,540 U.S. average; 94% above Texas’ $33,810 and 79% above Florida’s $36,570.

And home-equity borrowings in California ran $1,290 per capita —  13% above the U.S. average; 16% above Florida; and 258% above Texas where second mortgages are harder to get.

Remember, mortgage borrowers are typically high-income earners — so high repayment levels aren’t a big surprise. Yet curiously, California debts in other key loan categories look smaller compared with elsewhere.

Auto loans? California’s $5,150 per capita was 4% below the U.S. average; 31% below Texas; and 16% below Florida.

Credit cards? California balances ran $3,500 per capita —  11% above the U.S. average; 5% above Texas but 2% below Florida.

And education debts? California’s $4,660 per capita was 14% below the U.S. average; 10% below Texas; and 7% below Florida.

How bubbly?

On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … ONE BUBBLE!

If Californians can continue their above-average bill paying, that good habit will temper several economic risks bubbling up after a heavy dose of consumer overindulgence in the pandemic era.

Soaring inflation — especially for everyday staples — will challenge many family budgets. And if the bills can’t remain paid on time, these large loan amounts could become a major economic headache.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at


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