2001 Debt Servicing Deteriorated For Lower Income Group

["Gary Santos" <evs@xxxxxxxxxxx>]

Recent Changes in U.S. Family Finances: Evidence from the 1998 and 2001
Survey of Consumer Finances
Ana M. Aizcorbe, Arthur B. Kennickell, and Kevin B. Moore

http://www.federalreserve.gov/pubs/bulletin/2003/03bulletin.htm#jan

Data from the Federal Reserve Board's Survey of Consumer Finances show a
striking pattern of growth in family income and net worth between 1998 and
2001. Inflation-adjusted incomes of families rose broadly, although growth
was fastest among the group of families whose income was higher than the
median. The median value of family net worth grew faster than that of
income, but as with income, the growth rates of net worth were fastest for
groups above the median. The years between 1998 and 2001 also saw a rise in
the proportion of families that own corporate equities either directly or
indirectly (such as through mutual funds or retirement accounts); by 2001
the proportion exceeded 50 percent. The growth in the value of equity
holdings helped push up financial assets as a share of total family assets
despite a decline in the overall stock market that began in the second half
of 2000.

The level of debt carried by families rose over the period, but the
expansion in equities and the increased values of principal residences and
other assets were sufficient to reduce debt as a proportion of family
assets. The typical share of family income devoted to debt repayment also
fell over the period. For some groups, however--particularly those with
relatively low levels of income and wealth--a concurrent rise in the
frequency of late debt payments indicated that their ability to service
their debts had deteriorated.
http://www.federalreserve.gov/pubs/bulletin/2003/0103lead.pdf(174 KB PDF)