Make us your home page
Instagram

Household debt figures show Americans spending farther beyond their means than government

DAYTON, Ohio — Americans criticize government leaders for running up the federal budget deficit, but do they practice what they preach?

Not really.

Individuals are living beyond their means at an even greater rate than the government, based on recently released household debt figures.

U.S. household debt totaled $13.4 trillion at the end of 2010, or about 107 percent of the $12.5 trillion Americans earned in total household income last year, according to the Federal Reserve.

The government's total debt of $13.8 trillion represented about 94 percent of the $14.7 trillion in national income, or gross domestic product (GDP), last year.

"You hear people say that the government should manage its finances like the private sector does, but that's the problem," said James Brock, an economics professor at Miami University in Ohio.

Brock said household debt built up largely in the boom years preceding the recession has left millions of Americans struggling to escape overwhelming financial burdens.

"It's all a reflection of the 2000s, when it was spend-spend, borrow-borrow, and don't worry about tomorrow," Brock said. "Then tomorrow came."

Before the recession began, household debt doubled from about $7 trillion at the start of the decade to about $14 trillion in 2007. Government debt also climbed during that period, but at a slower pace. It grew from about $6 trillion to $9 trillion.

Lorraine Ransell of Dayton, Ohio, said concerns about job security and the general state of the economy have led her to "cut way back" on spending and concentrate on paying down her debts.

In years past, the dietitian said she wouldn't hesitate to make an impulse buy, using one of several credit cards to buy a pair of shoes or a handbag.

Not anymore.

"I have one credit card now, and I try to pay the balance off every month," Ransell, 46, said.

Ransell is among the growing number of Americans trying to pay down credit card debt and stay current on payments, based on the latest figures from the credit reporting bureau Trans­Union. And they are making progress.

Average credit card debt fell $286, or 5.8 percent, to $4,679 in the first quarter of 2011 from $4,965 in the fourth quarter of 2010, TransUnion reports.

That was the lowest average balance since the third quarter of 2000 and significantly lower than the peak of $5,776 in the first quarter of 2009, the company said.

But the decline in credit card debt doesn't mean, necessarily, that consumers have suddenly become more frugal or responsible.

"People are still doing some spending, but what we're seeing now is people using credit for basic necessities," said Melodee Sheils, director of Consumer Credit Counseling Service of the Miami Valley. "People are using their credit cards now to survive."

.Fast facts

U.S. household debt

The $13.4 trillion at the end of 2010 represents about 107 percent of the $12.5 trillion Americans earned in total household income last year, according to the Federal Reserve.

Government's debt

The $13.8 trillion represents about 94 percent of the $14.7 trillion in national income last year.

Household debt figures show Americans spending farther beyond their means than government 07/25/11 [Last modified: Monday, July 25, 2011 9:55pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Cox Newspapers.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Despite Hurricane Irma, Hillsborough remains on pace to unlock hotel tax that could pay for Rays ballpark

    Tourism

    TAMPA — Despite the threat of a catastrophic storm, it was business as usual at many Hillsborough County hotels in the days before Hurricane Irma bore down on the Tampa Bay region.

    The Grand Hyatt near TIA closed during Hurricane Irma, but many other Hillsborough hotels were open and saw an influx.
  2. New Graham-Cassidy health care plan stumbles under opposition from governors

    Nation

    WASHINGTON — The suddenly resurgent Republican effort to undo the Affordable Care Act was dealt a blow on Tuesday when a bipartisan group of governors came out against a proposal gaining steam in the Senate.

    Sen. Lindsey Graham, R-S.C., joined by, from left, Sen. Roy Blunt, R-Mo., Majority Whip John Cornyn, R-Texas, Sen. John Barrasso, R-Wyo., Sen. Bill Cassidy, R-La., Senate Majority Leader Mitch McConnell, R-Ky., and Sen. John Thune, R-S.D., speaks to reporters as he pushes a last-ditch effort to uproot former President Barack Obama's health care law, at the Capitol in Washington, Tuesday, Sept. 19, 2017. To win, 50 of the 52 GOP senators must back it -- a margin they failed to reach when the chamber rejected the effort in July. [/J. Scott Applewhite | Associated Press]
  3. Early estimates peg Hurricane Irma damage at as much as $65B

    Banking

    The damage totals from Hurricane Irma are still being tallied, but early numbers are in: As of Tuesday, the storm is estimated to have caused between $42.5 billion and $65 billion of damage. That's according to a Tuesday release by Irvine, Calif.-based analytics company CoreLogic.

    Hurricane Irma is estimated to have caused up to $65 billion in damage, said analytics company CoreLogic. Pictured is 
Hermilo Munoz Castillo as wades down a flooded street to check on his home in southern Collier County, Fla. after Hurricane Irma passed. | [LOREN ELLIOTT | Times]
  4. Port Tampa Bay makes public/private commitment for $60 million expansion project

    Business

    TAMPA — Port Tampa Bay approved a public-private partnership agreement with four other entities to divvy up who will pay for a $60 million widening and extension of the Big Bend Channel.

    Port Tampa Bay approved a participation agreement with the U.S. Army Corps of Engineers, Florida Department of Transportation, Tampa Electric Company and Mosaic Company at the port's monthly board meeting on  Tuesday. Port Tampa Bay President & CEO Paul Anderson signs the agreement as Ram Kancharla; Port Tampa Bay's vice president of planning & development, Brandon Burch; project manager at United States Army Corps of Engineers, Lois Moore; of Alcalde and Fay and Charles Klug; Port Tampa Bay principal counsel, and Tim Murphy; deputy district engineer of the Army Corps., looks on. [Company handout]
  5. One of St. Petersburg's newest condo projects is sold out

    Real Estate

    ST. PETERSBURG — Reflecting the continued demand for condos in downtown St. Petersburg, The Salvador, completed earlier this year at 199 Dali Blvd., has sold out. Records show that a 2-bedroom, 2-bath unit sold Friday for $620,000 in an all-cash deal. Two other units — a 3-bedroom, 2-bath penthouse and a …

     Reflecting the continued demand for condos in downtown St. Petersburg, The Salvador, completed earlier this year at 199 Dali Blvd., has sold out. 
[Rendering courtesy of aalliiggnn LLC]