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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]
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