Consumer credit statistics from 2007

Consumer Stats of 2007

By Sharon Secor

Direct Lending Solutions Staff Writer

The health of the American economy is largely dependent on the economic well-being of the everyday consumer, with consumer spending and confidence among its strongest driving forces. Consumer statistics, released by several federal agencies and many private organizations, are used to assess the economy on the basis of consumer spending and debt. Information is gathered on consumer spending and debt levels and how that debt is handled, which is then used as one of many economic indicators that help experts to predict trends in economic activity in the near future.

Individuals can make good use of these statistics as a benchmark to judge the health of their finances as compared to the national average. Most financial planners recommend that personal debt be kept to a reasonable level to ensure stable finances. However, it can be difficult for the average consumer to determine whether the debt they carry falls within that reasonable range.

A consumer who has a high debt to income ratio, yet is able to meet the payments without fail, may not feel that their debt level is unreasonable. But, the fact is that consumers who spend a large portion of income on debt payments place themselves in a very vulnerable financial position. An economic downturn or temporary loss of income can render those debt payments that are easily made today unmanageable, making financial recovery from such circumstances very difficult. With the use of current consumer statistics, one can gain perspective by comparing personal debt levels with those of the typical consumer and, should they prove higher than average, reduce debt before it becomes a problem.

Federal Consumer Statistics

According to the latest federal reserve statistics, outstanding consumer debt remained fairly stable throughout 2007 at a figure of $2.46 trillion dollars, up from $2.398 trillion at the end of 2006. That figure, which breaks down to about $8,200 in debt for every American, does not include the typical family's mortgage debt, omitting debt that is secured by real estate. Approximately 37 percent of that debt is revolving credit, such as credit cards and home equity lines of credit. Non revolving debt accounts for the other 63 percent of consumer debt, including such items as auto loans and student loans.

The Federal Reserve DSR report (debt service ratio) states that consumers in 2007 were spending 14.3 percent of after tax income on servicing debt. This figure includes all consumer loan servicing obligations, revolving, non revolving, and mortgage debt.

Another measure of consumer credit, the FOR (financial obligations ratio) is a more comprehensive evaluation of overall debt. The FOR includes mandatory payments like homeowners insurance, property taxes, car lease payments, and rental property expenses, gathering a better view of the percentage of after tax income consumers must spend on financial obligations.

According to 2007 FOR figures, the financial obligations ratio for the average consumer was abut 18 percent for homeowners and 25.90 percent for renters. This figure means that homeowners pay about 18 percent of their income on just home and car payments, while renters pay more than 25 percent for housing and auto expenses.

Credit Card Debt

Consumer credit card debt is rising. In 2007, the average household had credit card debt equivalent to about 5 percent of the typical family's income, which, according to data from the U.S. Department of Housing and Urban Development, was at a median of $59,000 in 2007. The total figure of revolving consumer debt, reported in June 2007 by the Federal Reserve, was $904 billion dollars, up from $879 billion at the end of 2006.

Credit card delinquencies were on the rise in 2007, with payment delinquencies of 30 days or more up 26 percent from the previous year to a total figure of $17.3 billion. Delinquencies of 90 days or more rose by 50 percent, and defaults soared by 18 percent to $961 million.

Personal bankruptcy filings were on the increase in 2007 as well. The 2006 total of 597,965 filings was surpassed in just the first three quarters of 2007, with 602, 847 filings during that period.

Today's economic climate is one that certainly calls for caution in your financial dealings, making it more important than ever to have an accurate idea of your financial standing. Consumer statistics can be an invaluable resource in determining how your debt level stacks up to the average consumer, allowing you to make informed decisions about your financial future.

Related Pages in Our Site: 2005 | 2006

Useful Resources:

Consumer Credit – G.19 Federal Reserve Board Release