Net change in total liabilities

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.   

 

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