January 13, 2021

Consumers debt service payments relative to income was essentially unchanged in the fourth quarter at a near-record low of 9.1% for a series that stretches back to 1980 — 41 years ago!

The household debt service ratio is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.

The financial obligations ratio is a somewhat broader concept and adds automobile lease payments, rental payments on tenant-occupied property, homeowners’ insurance, and property tax payments to the debt service ratio.  The picture looks much the same.  It fell to a record low of 13.7% in the second quarter of last year  and is now at 14.3% which close to that record low level and well below its historical average of 16.6%.

Any way one slices it consumer debt is  at a very comfortable level despite the combination of the recession and a pandemic in 2020.

Stephen Slifer


Charleston, SC