Friday, May 17, 2013

The Deleveraging of American Households

Below, Corrections depicts the Debt Service Ratio and Financial Obligations Ratio as a percent of disposable personal income (click to enlarge).  Note the y-axis is non-standard.  The Debt Service Ratio is the amount paid on outstanding mortgage and consumer debt, while the Financial Obligations Ratio adds on automobiles, rental payments, homeowner's insurance, and property taxes.  Disposable personal income takes income, subtracts taxes, and adds transfers.

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