The Financial Crisis at the Kitchen Table : Trends in Household Debt and Credit

Since the onset of the financial crisis, households have reduced their outstanding debt by about $1.3 trillion. While part of this reduction stemmed from a historic increase in consumer defaults and lender charge-offs, particularly on mortgage debt, other factors were also at play. An analysis of the New York Fed's Consumer Credit Panel — a rich new data set on individual credit accounts — reveals that households actively reduced their obligations during this period by paying down their current debts and reducing new borrowing. These household choices, along with banks' stricter lending standards, helped drive this deleveraging process