Bryan J. Noeth

Household Debt and the Great Recession

In the mid-2000s, household private debt reached a new level 1.2 times larger than personal income— before collapsing during the Great Recession. This paper uses microeconomic data to document the main changes in personal debt and explore the behavior of debt across generations over two periods: before and after the Great Recession. Special emphasis is placed on participation rates by category of debt (the extensive margin), volume borrowed (the intensive margin), and default behavior. Key findings include that between 1999 and 2013 the fraction of individuals with only unsecured (e.g., credit card) debt decreased, as did their balances. In addition, most forms of private debt (mortgages, credit card debt, and auto loans) had significant boom-bust cycles, but the effects across generations have been very asymmetric.

Home equity and household income

During 1995-2007, home equity increased more than gross income for high-, low- and middle-income groups.