Aug 13 2006

Hope you haven’t borrowed your share!

Published by at 11:44 am under General

Among the numbers the US Federal Reserve keeps track of is the “Consumer Credit Outstanding” which includes all individual debt not secured by real estate: loans such as auto loans, credit card debt, other short and intermediate term unsecured debt. As of the August 7 report, the total consumer debt at the end of the 2nd quarter was a bit more than $2.1 trillion (i.e. $2,100,000,000,000). With the US population at just about 300 million that works out a neat $7,000 per man, woman and child. Since the end of 2001, that total has increased by a neat $300 Billion or $1000 per head.

The Fed also publishes a “Financial Obligation Ratio” which estimates the percentage of disposable household income that goes to fixed obligations: rent or mortgage, auto leases, home owners insurance, and property taxes. For homeowners the ratio is about 17.5% and for renters it is about 24.5%. The homeowner number has been steadily increasing since 1980 but the renters’ number has declined from about 31% in 2001.

Remember that averages are only averages and ratios have two parts.

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