Has US household deleveraging ended? A model-based estimate of equilibrium debt

Bruno Albuquerque, Ursel Baumann, Georgi Krustev 18 April 2014

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The balance sheet adjustment in the household sector has been a prominent feature of the last US recession and subsequent recovery. The beginning of the economic downturn in late 2007 broadly coincided with a sustained reduction in household liabilities relative to income – that is, household deleveraging – which contrasted with the strong build-up of debt before the crisis. From a peak of around 129% in the fourth quarter of 2007, the household debt-to-income ratio fell by 26 percentage points to around 104% in the fourth quarter of 2013, led by sustained declines in mortgage debt.

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Topics:  Global crisis

Tags:  Great Recession, household debt, household deleveraging