IDEAS home Printed from https://ideas.repec.org/a/fip/fedlrv/00080.html

Household Debt and the Great Recession

Author

Listed:
  • Carlos Garriga
  • Bryan J. Noeth
  • Don E. Schlagenhauf

Abstract

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.

Suggested Citation

  • Carlos Garriga & Bryan J. Noeth & Don E. Schlagenhauf, 2017. "Household Debt and the Great Recession," Review, Federal Reserve Bank of St. Louis, vol. 99(2).
    • Handle: RePEc:fip:fedlrv:00080
    DOI: 10.20955/r.2017.183-205
    as

    Download full text from publisher

    File URL: https://files.stlouisfed.org/files/htdocs/publications/review/2017-04-12/household-debt-and-the-great-recession.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://doi.org/10.20955/r.2017.183-205
    File Function: https://doi.org/10.20955/r.2017.183-205
    Download Restriction: no
    File URL: https://libkey.io/10.20955/r.2017.183-205?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jonathan Heathcote & Fabrizio Perri & Giovanni L. Violante, 2010. "Unequal We Stand: An Empirical Analysis of Economic Inequality in the United States: 1967-2006," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 15-51, January.
    2. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    3. Bernanke, Ben S, 1995. "The Macroeconomics of the Great Depression: A Comparative Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 1-28, February.
    4. Thomas Piketty & Emmanuel Saez, 2014. "Inequality in the long run," PSE-Ecole d'économie de Paris (Postprint) halshs-01053609, HAL.
    5. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
    6. J. B. Taylor & M. Woodford (ed.), 1999. "Handbook of Macroeconomics," Handbook of Macroeconomics, Elsevier, edition 1, volume 1, number 1.
    7. Javier Diaz-Gimenez & Andrew Glover & José-Víctor Ríos-Rull, 2011. "Facts on the distributions of earnings, income, and wealth in the United States: 2007 update," Quarterly Review, Federal Reserve Bank of Minneapolis.
    8. Raj Chetty & Nathaniel Hendren & Patrick Kline & Emmanuel Saez, 2014. "Where is the land of Opportunity? The Geography of Intergenerational Mobility in the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(4), pages 1553-1623.
    9. Don Schlagenhauf & Bryan Noeth & Carlos Garriga, 2015. "Aggregate and Distributional Dynamics of Consumer Credit in the U. S," 2015 Meeting Papers 1095, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Costas Lapavitsas & Ivan Mendieta-Muñoz, 2017. "Financialisation at a Watershed in the USA JEL Classification: B50, E10, E44, G20," Working Paper Series, Department of Economics, University of Utah 2017_10, University of Utah, Department of Economics.
    2. Gómez-Puig, Marta & Sosvilla-Rivero, Simón, 2018. "Nonfinancial debt and economic growth in euro-area countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 56(C), pages 17-37.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. De Giorgi, Giacomo & Gambetti, Luca & Naguib, Costanza, 2020. "Life-Cycle Inequality: Blacks And Whites Differentials In Life Expectancy, Savings, Income, And Consumption," CEPR Discussion Papers 15182, C.E.P.R. Discussion Papers.
    2. Matthew O. Jackson, 2025. "Inequality's Economic and Social Roots: the Role of Social Networks and Homophily," Papers 2506.13016, arXiv.org.
    3. Minchul Yum, 2015. "Parental Time Investment and Human Capital Formation: A Quantitative Analysis of Intergenerational Mobility," 2015 Meeting Papers 996, Society for Economic Dynamics.
    4. Jess Benhabib & Alberto Bisin & Mi Luo, 2019. "Wealth Distribution and Social Mobility in the US: A Quantitative Approach," American Economic Review, American Economic Association, vol. 109(5), pages 1623-1647, May.
    5. Krueger, D. & Mitman, K. & Perri, F., 2016. "Macroeconomics and Household Heterogeneity," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 843-921, Elsevier.
    6. Giacomo DiPasquale & Matthew Gomies & Javier M. Rodriguez, 2021. "Race and class patterns of income inequality during postrecession periods," Social Science Quarterly, Southwestern Social Science Association, vol. 102(6), pages 2812-2823, November.
    7. Arčabić, Vladimir & Kim, Kyoung Tae & You, Yu & Lee, Junsoo, 2021. "Century-long dynamics and convergence of income inequality among the US states," Economic Modelling, Elsevier, vol. 101(C).
    8. Till Treeck, 2014. "Did Inequality Cause The U.S. Financial Crisis?," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 421-448, July.
    9. Naguib, Costanza, 2019. "Estimating the Heterogeneous Impact of the Free Movement of Persons on Relative Wage Mobility," Economics Working Paper Series 1903, University of St. Gallen, School of Economics and Political Science.
    10. Bertrand Garbinti & Jonathan Goupille-Lebret & Thomas Piketty, 2017. "Income Inequality in France, 1900-2014: Evidence from Distributional National Accounts," Working Papers 201704, World Inequality Lab.
    11. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
    12. Theodore Koutmeridis, 2013. "The Market for "Rough Diamonds": Information, Finance and Wage Inequality," CDMA Working Paper Series 201307, Centre for Dynamic Macroeconomic Analysis, revised 14 Oct 2013.
    13. Xiong, Ning & Wei, Yehua Dennis, 2025. "Economic inequality, intergenerational mobility, and life expectancy," Social Science & Medicine, Elsevier, vol. 366(C).
    14. Minchul Yum, 2018. "On the distribution of wealth and employment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 86-105, October.
    15. Giulio Fella & Serafin Frache & Winfried Koeniger, 2020. "Buffer‐Stock Saving And Households' Response To Income Shocks," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(3), pages 1359-1382, August.
    16. repec:rim:rimwps:21-03 is not listed on IDEAS
    17. Cowell, Frank A., 2014. "Piketty in the long run," LSE Research Online Documents on Economics 65992, London School of Economics and Political Science, LSE Library.
    18. Minchul Yum, 2023. "Parental Time Investment And Intergenerational Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 187-223, February.
    19. André Kallåk Anundsen & Ragnar Nymoen, 2015. "Did US Consumers 'Save for a Rainy Day' Before the Great Recession?," CESifo Working Paper Series 5347, CESifo.
    20. Schäfer, Andreas & Prettner, Klaus, 2016. "The fall and rise of inequality," VfS Annual Conference 2016 (Augsburg): Demographic Change 145806, Verein für Socialpolitik / German Economic Association.
    21. Chatzouz, Moustafa, 2014. "Government Debt and Wealth Inequality: Theory and Insights from Altruism," MPRA Paper 77007, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlrv:00080. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scott St. Louis (email available below). General contact details of provider: https://edirc.repec.org/data/frbslus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.