Obviously it’s important to know the extent to which household debt reduction in the US has come from voluntary decisions versus how much has come from involuntary charge-offs.
The knowledge leads to a better understanding of inequality trends and measurement problems.
But within the more limited realm of voluntary debt reduction, it’s also helpful to explore the ways in which competing circumstances can influence households’ decisions to save and spend. Read more
What impact did the crisis have on the attitudes of American families toward financial risk?
A paper published last week by the Federal Reserve, and cited in a speech by Elizabeth Duke on Thuesday, begins to answer this question by looking at how US households’ wealth, savings and expectations changed between 2007 and 2009. The researchers conducted a follow-up survey in 2009 of families analysed as part of the Survey of Consumer Finances (SCF) in 2007. Nearly 89 per cent of 2007 participants were re-interviewed. Read more
There was some good news in this morning’s Personal Income and Outlays report for January, though not quite enough to get excited about.
Personal income climbed 1 per cent, well above expectations, and the savings rate increased for the first time since last July, from 5.4 per cent in December to 5.8 per cent. Read more
The onslaught of chart porn begins with the changes in the US personal savings rate for the last five years, updated to reflect Monday’s income and outlays report from the BEA: