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

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Abstract

Since the onset of the financial crisis, households have reduced their outstanding debt by about $1.3 trillion. While part of this reduction stemmed from a historic increase in consumer defaults and lender charge-offs, particularly on mortgage debt, other factors were also at play. An analysis of the New York Fed?s Consumer Credit Panel?a rich new data set on individual credit accounts?reveals that households actively reduced their obligations during this period by paying down their current debts and reducing new borrowing. These household choices, along with banks? stricter lending standards, helped drive this deleveraging process.

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  • Meta Brown & Andrew F. Haughwout & Donghoon Lee & Wilbert Van der Klaauw, 2013. "The financial crisis at the kitchen table: trends in household debt and credit," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 19(April).
    • Handle: RePEc:fip:fednci:y:2013:i:april:n:v.19no.2
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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, pages 273-322, National Bureau of Economic Research, Inc.
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    4. Robert M. Hunt, 2002. "The development and regulation of consumer credit reporting in America," Working Papers 02-21, Federal Reserve Bank of Philadelphia.
    5. Donghoon Lee & Wilbert Van der Klaauw, 2010. "An introduction to the FRBNY Consumer Credit Panel," Staff Reports 479, Federal Reserve Bank of New York.
    6. James X. Sullivan, 2008. "Borrowing During Unemployment: Unsecured Debt as a Safety Net," Journal of Human Resources, University of Wisconsin Press, vol. 43(2), pages 383-412.
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