More Warning Signs

The percentage of households' debt service burden estimated as the ratio of debt-service payments to their after-tax personal income has continued to rise. Over the period from 1996 to 2000, the percentage of total debt service payments to disposable (after-tax) incomes rose from 13.00 percent to 13.70 percent. (See the chart nearby.) The relative contributions of consumer and mortgage debt were about the same in both periods. If income growth slows in the coming months (as appears likely), expect an acceleration in the payment-income ratio.

Printer-Friendly Chart