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Household Debt and the Great Recession

Author

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  • Carlos Garriga
  • Bryan J. Noeth
  • Don E. Schlagenhauf

Abstract

In the mid-2000s, household private debt reached a new level 1.2 times larger than personal income? before collapsing during the Great Recession. This paper uses microeconomic data to document the main changes in personal debt and explore the behavior of debt across generations over two periods: before and after the Great Recession. Special emphasis is placed on participation rates by category of debt (the extensive margin), volume borrowed (the intensive margin), and default behavior. Key findings include that between 1999 and 2013 the fraction of individuals with only unsecured (e.g., credit card) debt decreased, as did their balances. In addition, most forms of private debt (mortgages, credit card debt, and auto loans) had significant boom-bust cycles, but the effects across generations have been very asymmetric.

Suggested Citation

  • Carlos Garriga & Bryan J. Noeth & Don E. Schlagenhauf, 2017. "Household Debt and the Great Recession," Review, Federal Reserve Bank of St. Louis, vol. 99(2).
    • Handle: RePEc:fip:fedlrv:00080
    DOI: 10.20955/r.2017.183-205
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    References listed on IDEAS

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    Cited by:

    1. Costas Lapavitsas & Ivan Mendieta-Muñoz, 2017. "Financialisation at a Watershed in the USA JEL Classification: B50, E10, E44, G20," Working Paper Series, Department of Economics, University of Utah 2017_10, University of Utah, Department of Economics.
    2. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2018. "Nonfinancial debt and economic growth in euro-area countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 56(C), pages 17-37.

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    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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