After hitting new lows, the Financial Obligations Ratio (FOR) for 4Q/15 started edging up and the Debt Service Ratio (DSR) also inched up.
According to the Federal Reserve the FOR slipped upward to 15.38% in 4Q/15, compared to 15.34% in 3Q/15 and 15.31% in 4Q/15. The DSR rosed to 10.07% in the fourth quarter of this year, compared to 10.04% in third quarter, and 10.01% one-year ago.
The FOR peaked at 18.13% in the fourth quarter of 2007. 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 2015, revolving consumer credit outstanding rose from $890.0 billion at the start of year to $926.4 billion at the end of the year, for a YOY gain of 4.1%.
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 (seasonally adjusted)
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
4Q/15: $926.4 billion
Source: Federal Reserve
NOTE: All Figures Revised & Updated as of 4/14/16
For a complete archive of more than 60,000 articles published since 1995 search the CardFlash.com library.