February 15, 2022

Consumers debt service payments relative to income rose somewhat in the third quarter to 9.2%,  This series set a record low of 8.4% in the first quarter of last year,  This series stretches back to 1980 — 41 years ago!  Consumer debt in relation to income is slightly higher than it was a couple of quarters ago but remains very low.  The average for this series is 11.1%.

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 12.6% in the first quarter of last year  and is now at 13.8% which is slightly above that record low level but well below its historical average of 16.3%.

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