The Financial Obligations Ratio (FOR) for 3Q/15 has declined to 15.31%, the lowest measurement since 1981 and the Debt Service Ratio (DSR) plunged to 10.03%, the second lowest ever recorded in 35 years.
According to the Federal Reserve the FOR declined to 15.31% in 3Q/15, compared to 15.33% in 2Q/15 and 15.34% in 3Q/15. The DSR declined to 10.03% in the third quarter of this year, compared to 10.03% in second quarter, and 10.04% one-year ago.
The FOR peaked at 18.13% in the fourth quarter of 2007. While the current 15.33% ratio is the lowest in 34 years, the second lowest was 15.09% in the fourth quarter of 1980 and 2014.
Since peaking at 13.18% in the fourth quarter of 2007, the beginning of the Great Recession, the DSR has declined steadily since, dipping into single digits for the first time in the fourth quarter of 2012 (9.87%).
However, consumers of late have been taking on more debt. According to the Federal Reserve, during 2014, revolving consumer credit outstanding rose from $890.8 billion on Jan 1st to $921.1 billion at the of November.
The household DSR is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt.
The Financial Obligations Ratio is a broader measure than the Debt Service Ratio. It includes rent payments on tenant-occupied property, auto lease payments, homeowners’ insurance, and property tax payments.
U.S. FINANCIAL OBLIGATIONS RATIO
U.S. CONSUMER DEBT SERVICE RATIO
Revolving Consumer Credit Historical
4Q/13: $857.6 billion
1Q/14: $861.5 billion
2Q/14: $875.1 billion
3Q/14: $883.4 billion
4Q/14: $890.0 billion
1Q/15: $890.8 billion
2Q/15: $910.2 billion
3Q/15: $923.4 billion
Source: Federal Reserve
NOTE: All Figures Revised & Updated as of 12/28/15
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