The Sustainability of U.S. Household Finances

Daniel Cooper, Barry Cynamon and Steven Fazzari

Community Development Publications and Reports, 2016, 44 pages

Abstract: The financial sustainability of U.S. households is usually proxied by intuitive measures, like the debt-income ratio, that are only loosely linked with a more rigorous definition of sustainability. We employ balance sheet and income date from the PSID to project lifetime resources and compare these resources with household consumption to assess household financial sustainability. Preliminary results show that while the vast majority of American households were sustainable in the mid 1980s, sustainability declined sharply through the early 2000s and remained low until the eve of the Great Recession. Sustainability improved modestly in the aftermath of the crisis, but remains well below levels from two decades ago.

Keywords: household debt; family finances; household financial stability (search for similar items in EconPapers)
Date: 2016
Note: The St. Louis Fed Center for Household Financial Stability and the Private Debt Project hosted three "Tipping Points" Household Debt Research Symposia, 2016-2018. All three sessions were centered on the question of "tipping points" in regard to debt: How and when does household debt move from being wealth-building and productive for households and the economy to being wealth-depleting and destructive for both?; Conference Materials: https://fraser.stlouisfed.org/title/tipping-points-i-mapping-understanding-impact-debt-household-financial-well-9372/session-list-685741; Conference Executive Summary: https://fraser.stlouisfed.org/title/tipping-points-i-mapping-understanding-impact-debt-household-financial-well-9372/executive-summary-685740; Tipping Points Conference Series: https://fraser.stlouisfed.org/series/tipping-points-conference-series-9375
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Persistent link: https://EconPapers.repec.org/RePEc:fip:l00101:103205

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