Household Debt Service Burden Rises

Last month the Division of Research and Statistics of the Federal Reserve Board revised several statistical tables as a result of earlier revisions of the National Income and Product Accounts. Among these tables was the Fed's measure of consumers' debt burden. Debt burden is "an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgages and consumer debt." Over the past two decades, the lowest ratio of debt burden was 11.84 percent in the fourth quarter of 1993, and the highest was 14.38 percent in the fourth quarter of 1986. Data for the second quarter of each of the past six years are shown in the accompanying table. It is noteworthy that the debt-burden percentage has exceeded 14 percent for the first time in 15 years. Given the sagging economy, these are sobering data. Of the total increase of 83 basis points, consumer credit contributed 42 percent and mortgage credit, 58 percent.

Source: Federal Reserve Board