The previous discussion on Household Debt, based on St. Louis Fed’s chart, generated a robust discussion in comments.

Lest anyone think that Fed office is playing with the data, here are some additional graphs, courtesy of BLS (the data only goes to 2003).

First, we took a look at the Net change in total liabilities, based on highest and lowest quintiles of income before taxes:

Highest 20 percent income quintile

Hi_20_delta_liability

The highest 5th saw their liabilities shoot up dramatically. This group, at $150k annual pre-tax income or greater, includes much of the mid-upper middle class, two income families, professionals, etc. This is the moderately well off suburban consumer, or the urban professional.

Their liabilities have skyrocketed only since 2001.

Lowest 20 percent income quintile
Low_20_delta_liability

The lowest quintile has seen a gradual rise since 1984; They did see a burst since 2000, but not as severe as the highest 20%.

Note that Liabilities for the bottom 20% actually went down during the last few years of the prior expansion (my unsupported  assumption is that this was due to increased income, as this group typically has only minor equity holdings).

 

Now lets look at the net change in total assets AND liabilities:

Lowest 20 percent income quintileLo_20_net_change_al

The wealth effect of the bubble apparently made everybody, at least temporarily, better off.

Highest 20 percent income quintile

Hi_20_net_change_al

Note the change in assets plus liabilities for the top 20% (~$150k per year). That’s quite the negaitve change in financial circumstances.   

 

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Net change in total liabilities”

  1. confused says:

    do you think these folks are buying 2ed houses etc? As a confused worker I haf to admit I dont care about mid-upper middle class.

  2. confused says:

    Fantastic blog by the way.

  3. The lowest quintile has seen a gradual rise since 1984; They did see a burst since 2000, but not as severe as the highest 20%.

    Your graphs have slightly different scale, which gives that impression.

    In 1996 liabilites for the bottom quintile were around $900; in 2003 the approach 2800, an increase of ariybd 210%.

    In 1996 liabilities for the top quintile were around $15,000; in 2003 they’re around $58,000, an increase of … 280%.

    It’s not clear to me how much of a difference there is between tripling your debt and quadrupling it.

    Also do we care about the percentage of HH income that debt represents? Is it possible that the rise in debt has put the lower quntile folks in a more precarious position than the higher income folks? Honest techinical question.