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The financial crisis at the kitchen table: trends in household debt and credit

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  • Meta Brown
  • Andrew Haughwout
  • Donghoon Lee
  • Wilbert van der Klaauw

Abstract

The Federal Reserve Bank of New York (FRBNY) Consumer Credit Panel, created from a sample of U.S. consumer credit reports, is an ongoing panel of quarterly data on individual and household debt. The panel shows a substantial run-up in total consumer indebtedness between the first quarter of 1999 and the peak in the third quarter of 2008, followed by a steady decline through the third quarter of 2010. During the same period, delinquencies rose sharply: Delinquent balances peaked at the close of 2009 and then began to decline again. This paper documents these trends and discusses their sources. We focus particularly on the decline in debt outstanding since mid-2008, which has been the subject of considerable policy and media interest. While the magnitudes of balance declines and borrower defaults, represented as “charge-offs” on consumers’ credit reports, have been similar, we find that debt pay-down has been more pronounced than this simple comparison might indicate.

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Bibliographic Info

Paper provided by Federal Reserve Bank of New York in its series Staff Reports with number 480.

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Date of creation: 2010
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Handle: RePEc:fip:fednsr:480

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Related research

Keywords: Consumer credit ; Households - Economic aspects ; Credit cards ; Debt ; Default (Finance) ; Mortgages;

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References

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  1. Rajashri Chakrabarti & Donghoon Lee & Wilbert van der Klaauw & Basit Zafar, 2013. "Household Debt and Saving during the 2007 Recession," NBER Chapters, in: Measuring Wealth and Financial Intermediation and Their Links to the Real Economy National Bureau of Economic Research, Inc.
  2. Donald P. Morgan & Benjamin Iverson & Matthew Botsch, 2008. "Seismic effects of the bankruptcy reform," Staff Reports 358, Federal Reserve Bank of New York.
  3. Robert M. Hunt, 2002. "The development and regulation of consumer credit reporting in America," Working Papers 02-21, Federal Reserve Bank of Philadelphia.
  4. Donghoon Lee & Wilbert van der Klaauw, 2010. "An introduction to the FRBNY Consumer Credit Panel," Staff Reports 479, Federal Reserve Bank of New York.
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Cited by:
  1. Lee, Donghoon & Van der Klaauw, Wilbert & Haughwout, Andrew F. & Brown, Meta & Scally, Joelle, 2014. "Measuring student debt and its performance," Staff Reports 668, Federal Reserve Bank of New York.
  2. John Whalley & Manmohan Agarwal & Jing Wang & Sean Walsh & Chen Yan, 2011. "Linking External Sector Imbalances and Changing Financial Instability before the 2008 Financial Crisis," NBER Working Papers 17645, National Bureau of Economic Research, Inc.
  3. Jaison R. Abel & Richard Deitz, 2012. "How severe was the credit cycle in the New York-northern New Jersey region?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 18(Nov).
  4. Thorvardur Tjörvi Ólafsson & Karen Á. Vignisdóttir, 2012. "Households’ position in the financial crisis in Iceland. Analysis based on a nationwide household-level database," Economics wp59, Department of Economics, Central bank of Iceland.
  5. Agarwal, Manmohan & Walsh, Sean & Wang, Jing & Whalley, John & Yan, Chen, 2013. "Expected worsening or improving financial instability and the 2008 financial crisis," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 92-105.
  6. Grant Graziani & Wilbert van der Klaauw & Basit Zafar, 2013. "A boost in the paycheck: survey evidence on workers’ response to the 2011 payroll tax cuts," Staff Reports 592, Federal Reserve Bank of New York.

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