The Ongoing Deleveraging of American Households
The chart above is an update of related CD posts in May (here and here), showing the ongoing deleveraging of American households.
In the first quarter of 2011, household debt service for required payments on outstanding mortgage and consumer debt as a share of disposable personal income fell to 11.51%, the lowest ratio since the second quarter of 1995; and the ratio for all household financial obligations (adds automobile lease payments, rental payments on tenant-occupied property, homeowners' insurance and property tax payments to the debt service ratio) fell to 16.4%, the lowest ratio since the third quarter of 1994.
Now if we could just get Congress to engage in the same deleveraging behavior, and get the national debt and spending under control.
Update: Note that the monthly personal savings rate was 5.4% in June, and the monthly average since January 2010 has been above 5% (5.2%), which is back to savings rate that prevailed in the mid-1990s (see chart below).