Total debt service payments as percentage of disposable income have fallen from a peak of 14.1% in 7/07 to just 10.6% today, a level last seen in 10/93; a decline of 25%. This is due to a combination of low interest rates, rising disposable income, and lots of mortgage defaults, which have reduced household debt from 100% of GDP in 4/09 to just 86% now.
Tag Archives: disposable income
Down GDP, Down!
With personal income growth flat, savings rates up and real disposable income down 0.2% in October, it’s not surprising personal consumption grew just 1.4%! The weak pace of income growth will limit Q4 GDP growth to less than 1.5% and GDP growth will be yet weaker in Q1 ’13 (1.2%) as disposable incomes will fall further due to tax hikes and the expiration of the accelerated depreciation business tax credit.