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Perspectives on recent trends in consumer debt

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  • Andrew Kish

Abstract

The causes and ramifications of the rise in the consumer debt burden over time have been subject to much debate. This paper first offers a brief overview and analysis of the key economic variables used to evaluate consumer debt levels. The principal focus of the paper, however, is a broad review of the literature on the topic of consumer debt to provide a framework for how to assess recent credit trends. In addition, three explanations for credit growth — the democratization of credit, increased convenience use of credit, and increased homeownership — are evaluated in terms of their contribution to overall credit growth. This paper concludes that while these three trends have all played some part in increasing credit outstanding, there are clearly other significant factors contributing to the increase in consumer debt over time.

Suggested Citation

  • Andrew Kish, 2006. "Perspectives on recent trends in consumer debt," Payment Cards Center Discussion Paper 06-05, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpdp:06-05
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    File URL: http://www.phil.frb.org/pcc/papers/2006/D2006JuneConsumerDebtCover.pdf
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    References listed on IDEAS

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    1. Sebastian Barnes & Garry Young, 2003. "The rise in US household debt: assessing its causes and sustainability," Bank of England working papers 206, Bank of England.
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    5. Cox, Donald & Jappelli, Tullio, 1993. "The Effect of Borrowing Constraints on Consumer Liabilities," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 197-213, May.
    6. John V. Duca, 2004. "How vulnerable are housing prices?," Southwest Economy, Federal Reserve Bank of Dallas, issue Mar, pages 1,11-16.
    7. Mark Furletti, 2003. "Credit card pricing developments and their disclosure," Payment Cards Center Discussion Paper 03-02, Federal Reserve Bank of Philadelphia.
    8. Ellis W. Tallman, 2001. "The burden of debt," EconSouth, Federal Reserve Bank of Atlanta, issue Q2, pages 1-1.
    9. Dean M. Maki, 2000. "The growth of consumer credit and the household debt service burden," Finance and Economics Discussion Series 2000-12, Board of Governors of the Federal Reserve System (U.S.).
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    11. Kartik B. Athreya, 2004. "Shame as it ever was : stigma and personal bankruptcy," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 1-19.
    12. Robert G. Murphy, 1997. "Household Debt and Aggregate Consumption Expenditures," Boston College Working Papers in Economics 386, Boston College Department of Economics.
    13. Jonathan McCarthy & Richard Peach, 2004. "Are home prices the next "bubble"?," Economic Policy Review, Federal Reserve Bank of New York, issue Dec, pages 1-17.
    14. Leonard I. Nakamura & Tom Stark, 2005. "Benchmark revisions and the U.S. personal saving rate," Working Papers 05-6, Federal Reserve Bank of Philadelphia.
    15. Margaret M. McConnell & Richard Peach & Alex Al-Haschimi, 2003. "After the refinancing boom: will consumers scale back their spending?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 9(Dec).
    16. Wenli Li, 2005. "Moving up: trends in homeownership and mortgage indebtedness," Business Review, Federal Reserve Bank of Philadelphia, issue Q1, pages 26-34.
    17. Kathleen W. Johnson, 2004. "Convenience or necessity? understanding the recent rise in credit card debt," Finance and Economics Discussion Series 2004-47, Board of Governors of the Federal Reserve System (U.S.).
    18. Elizabeth Schmitt, 2000. "Does rising consumer debt signal future recessions?: Testing the causal relationship between consumer debt and the economy," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 28(3), pages 333-345, September.
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    Keywords

    Consumer credit;

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