March 20, 2020

Consumers debt service payments relative to income was essentially unchanged in the fourth quarter at 9.7% which is the lowest on record for a series that stretches back to 1980 — 38 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  14.9% in Q4 2012  and is now at 15.1% 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.

Stephen Slifer


Charleston, SC