The U.S. economy has been growing glacially for the last four years. And, by almost all tellings, the overhang of debt from the pre-crisis years is a big part of the reason why. Americans have been paying down debts and building up savings, without using any additional income to buy more goods and services and fuel more economic growth.

So far, so good. But what's really happening with household debt in the United States, and what does it augur for the future? The New York Fed's quarterly report on household debt provides some of the best evidence. The second quarter report was released Thursday, and this chart shows the overall picture of America's household indebtedness. Here is what we can discern from it and the rest of the data.


Debt levels really are coming down. Total household debt fell another $78 billion, or 0.7 percent, in the second quarter of 2013. Since peaking in the third quarter of 2008, American households have reduced their debt burdens by $1.53 trillion, or 12 percent. Deleveraging really is the story of the last few years. The shift is even more dramatic relative to the size of the overall economy; household debt totaled 85 percent of GDP in the third quarter of 2008, and is down to 67 percent in the second quarter of 2013.

Mortgage debt is where the action is. There has been plenty of attention paid to the role of credit cards and student loan debt in weighing down Americans. But in the overall numbers, housing-related debt dwarfs those burdens. Add the $7.8 trillion in outstanding mortgage debt and another half a trillion in home equity credit lines, and that's more than three-quarters of all household debt. Even more significant, that's where all the movement is in the falling levels of consumer indebtedness. All other forms of household debt are actually up slightly since the third quarter of 2008, while the decline in debt levels can be chalked up entirely to mortgages and home equity loans.

All is not well with student loans. Of the major types of household debt, the rate of delinquent payments is highest among student loans, and the rate has risen over the last two years even as the proportion of people behind on their payments has fallen for most other types of debt. It is a sign that high education costs combined with a tepid job market are causing new strain on people who financed school by borrowing. The proportion of seriously deliquent auto loans is lower than it was five years ago, and credit card and mortgage deliquency rates are only slightly higher. The student loan delinquency rate, though, has risen from 7.55 percent in the second quarter of 2008 to 10.9 percent in 2013.


The swings are biggest in the bubble states. The decline in total household debt is most pronounced in some of the states were the housing bubble blew the biggest. As the chart below shows, there have been major declines in debt per person in California, Nevada, Arizona and Florida. In states such as Texas and New Jersey, debt per person rose during the housing boom, then leveled off around 2008 and has been little changed since. Per capita household debt in Texas was $35,430 in the second quarter, down from $36,880 five years ago (a $1,450 drop). In Nevada, home to an epic housing bubble, per capita debt has fallen to $49,350 from $88,580, a $39,000 decline. It is reasonable to assume that the decline in mortgage debt in housing bubble states -- in no small part  attributable to foreclosures, short-sales and restructurings -- is a major part of the total decline of Americans' debt levels.


And some, but not all, the bubble states are leading the pack on delinquencies. The rates of people who are more than 90 days behind on their mortgage obligations are dramatically different depending on where people live. In Nevada and Florida, the rates are 13.2 percent and 12.2 percent, respectively. By contrast, even in some economically troubled states, delinquency rates are much lower: 4.2 percent in Michigan and 3.2 percent in Arizona. That suggests that even five years after the recession began and seven years after housing started dipping, the extraordinary run-up in home prices of the last decade still drives debt delinquency today.