The 2nd quarter National Balance Sheet Accounts numbers were released today, and it appears households may finally be starting to rein in their debt levels just a little bit, at least relative to disposable income. We’ve been following the debt-to-disposable-income ratio for awhile now, and in the second quarter we saw a rather dramatic reversal as it dropped 3%, from an all-time high of 148.58%, to 145.57%.
One month obviously doesn’t make a trend (and we can see it often just resumes rising after a down month), but this is the first major downward movement in this measure in years. Beyond that we’ve been wondering why despite the recession we hadn’t seen a hint of levels slowing down as they typically do in such economic circumstances (as as was seen in the numbers in 2000).
Fortunately, or unfortunately, depending on how you want to view it, this drop is not rooted in an actual decrease in debt levels, but rather an increase in disposable income. The Household-debt-per-capita measure jumped by another $800, and now sits at $43,400, and is up over $3,000 from 1Q 2009 when the recession really took hold.
Knowing that, it’s not a surprise the the debt-to-GDP ratio continued to climb… up almost half a point in the quarter to rest at an all-time high of 94.17. Though at least this ratio has more-or-less leveled out in the last year.
So, long story short, we had some good income gains in the second quarter of this year, unfortunately we continue to pile on the debt.
