Consumer Debt Statistics

According to many economists, the economic recovery of the United States is based on three things, the housing market, the ability for consumers to get access to credit, and the willingness of consumers to start spending again. Lack of consumer demand is believed by many to be the biggest obstacle to recovery. A recent survey indicated that one quarter of small businesses cited poor sales as their most important problem.

Another survey has shown that household debt has been shrinking since the first quarter of 2008. While paying off debts is good for the average American household, it is bad for the economy overall, since the money being used to pay off debt isn’t being spent on new goods and services.

Overall, mortgages make up the majority of this debt. Since about twenty five percent of homes in the country are underwater, it is believed by many economists that foreclosures will be on the rise again. The remaining debt is mostly spread between credit cards and student loans. Credit card is rising rapidly, as many consumers are stuck between non-existent or stagnant wages due to high unemployment, and the rising cost of many goods and services. Student loan debt is experiencing record high defaults, since many college graduates are unable to find jobs that earn enough to pay back their loans.

In fact, the average consumer living in the United States currently has a debt-to-income ratio of 150%. This amount is a new record and it is believed that the recent credit and housing bubbles have contributed to these record debt levels.

 

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