HOUSEHOLD DEBT GOES THROUGH THE ROOF
April 23, 2008
The housing bust has gotten most of the headlines, but the real story is the astonishing buildup of household debt in the United States and around the world in recent years, says BusinessWeek. U.S. households now owe almost $14 trillion, nearly equal to the annual output of the U.S. economy.
Homeowners have steadily taken on more financial obligations, including mortgages, property taxes and home insurance, says BusinessWeek:
- The nearly 20 percent of homeowners' disposable income was tied up in these financial obligation in 2007, up from nearly 15 percent for 2000.
- The financial position of renters has improved since 2000, with the percentage of their disposable income tied up in financial obligations dropping around 4 percent.
- Households in Great Britain have a bigger debt burden than those in the United States, although the American debt burden rose sharply from1996 to 2006.
- Meanwhile, Japanese and German households have not added to their debt load.
It was not until the start of this decade that borrowing really took off, says BusinessWeek:
- During the 1990s household debt grew only slightly faster than the overall economy.
- If that trend had continued after 2000, American households would owe about $3 trillion less today.
Source: Michael Mandel, "Household Debt Goes Through the Roof," Business Week, April 21, 2008.
Browse more articles on Economic Issues