Household Debt Flow Increases Less in Q4 2013
According to the Federal Reserve's Flow of Funds report, households added $42.8 billion of debt in the fourth quarter of 2013. This is the fourth time in the last five quarters that households have increased their level of debt. However, the level of debt added in the fourth quarter was about 33% of the debt added in the third quarter and less than 50% of the debt added in the fourth quarter of 2012.
However, since the first quarter of 2011, the trend still has been for households to add more debt each quarter. Although, household debt flow is more volatile than it was prior to financial collapse in 2008. Despite the increase in household debt flow. household debt as a percent of GDP has declined every quarter but one since March 2009. Household debt as a percent of GDP is at its lowest level since December 2002. If household debt flow continues to moderate, then this will have a dampening effect on real durable goods consumer spending.
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