How Did the Great Recession Affect U.S. Household Financial Burdens?
Consumer Interests Annual, Volume 59, 2013
10 Pages Posted: 10 Jul 2013
Date Written: July 9, 2013
The recession that started in December 2007 was longer than any since the Great Depression of the 1930s. Household incomes dropped and unemployment rates increased to over 9%. We investigate the proportion of households having financial obligations over 40% of pretax income (having a high burden,) with financial obligations defined as debt payments, rent, vehicle leases, property taxes, and homeowners insurance. The proportion with high burdens increased for renters, from 35% in 2007 to 39% in 2010, but the proportion for homeowners decreased slightly, from 22% in 2007 to 21% in 2010. Multivariate analyses of the 2010 Survey of Consumer Finances (SCF) dataset show factors affecting the likelihood of having a high burden were generally similar to factors shown to be important in analyses of the 1992 to 2007 SCF datasets. The slight decrease in the proportion of homeowners with high burdens might be related to a shift of some households to renting. The increase in the proportion of renters with high burdens might reflect a continued deterioration of the economic conditions of renter households.
Keywords: Borrowing Decisions, Household Debt, Financial Obligations, Education, Expectations, Homeownership
JEL Classification: C250, D120, G210, G330
Suggested Citation: Suggested Citation