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Deleveraging of the American Household - 8/13/14

There has been much talk in recent years about the deleveraging of the American household.  The notion is that the recession had a jarring effect on people’s perceptions of their own economic security, with rising insecurity translating into less debt accumulation and accelerated repayments.  That may be, but America still has a debt problem.  A recent study by the Urban Institute estimates that 1 in 3 adults with a credit history, or about 77 million people, have at least one account in collections.  The study examined non-mortgage debt, including auto loans, medical bills, credit card balances, child support payments and even parking tickets. 

The average amount owed is $5,200.  Nevada, the state hardest hit by the housing downturn and the Great Recession, has the highest percentage of residents with debt in collections – 47 percent. The average amount owed is also the highest in the nation at $7,200.  By contrast, North Dakota, which arguably is home to the nation’s strongest economy, has just 19 percent of residents in collections.  Among the 100 largest metropolitan areas in the nation, the Minneapolis region is associated with the lowest percentage of residents with debt in collections at 20 percent.  At 51 percent, McAllen, Texas has the highest percentage. 

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.