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74 posts on "Household Finance"

August 22, 2016

How Do People Revise Their Inflation Expectations?

LSE_How Do People Revise Their Inflation Expectations?

The New York Fed started releasing results from its Survey of Consumer Expectations (SCE) three years ago, in June 2013. The SCE is a monthly, nationally representative, internet-based survey of a rotating panel of about 1,300 household heads. Its goal, as described in a series of Liberty Street Economics posts, is to collect timely and high-quality information on consumer expectations about a broad range of topics, covering both macroeconomic variables and the households' own situation. In this post, we look at what drives changes in consumer inflation expectations. Do people respond to changes in recent realized inflation, and to expected and realized changes in prices of salient individual commodities—like gasoline? Understanding what drives inflation expectations is important for the conduct of monetary policy, since it improves a central bank’s ability to assess its own credibility and to evaluate the impact of its policy decisions and communication strategy.

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Posted by Blog Author at 7:00 AM in Household Finance, Inflation | Permalink | Comments (0)

August 12, 2016

Puerto Rico’s Evolving Household Debts

LSE_Puerto Rico’s Evolving Household Debts

Debt and its performance play a critical role in economic development. The enormous increase in mortgage debt that took place during the run-up to the 2007 financial crisis and the contribution of that debt to the crisis underscore the importance of household debt to financial stability and economic growth. While we regularly report on household debt at the national level and for selected states in our Quarterly Report on Household Debt and Credit, we have not reported separately on Puerto Rico. This post introduces metrics on household debt in Puerto Rico, which we plan to update regularly. Like our other reports on household debt, this analysis uses our FRBNY Consumer Credit Panel, which is based on anonymized credit data from Equifax. We also take a look at some data for Puerto Rico’s banking sector to complete the picture of household debt for the Commonwealth.

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Posted by Blog Author at 7:00 AM in Credit, Household Finance, Puerto Rico, Regional Analysis | Permalink | Comments (0)

August 09, 2016

Just Released: Recent Developments in Consumer Credit Card Borrowing

LSE_2016_Just Released: Recent Developments in Consumer Credit Card Borrowing

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released its Quarterly Report on Household Debt and Credit for the second quarter of 2016. It showed that overall household debt increased modestly over the period, with subdued mortgage originations and moderate but continued increases in non-housing related credit—particularly auto loans and credit cards. The total outstanding credit card balance now stands at $729 billion, up $17 billion from the first quarter, but still well below the peak of $866 billion reached in the fourth quarter of 2008. Credit card delinquency rates have continued to improve since peaking in 2008. We have previously “looked under the hood” of auto loans, and in this post, we present analysis that provides new insight into credit card debt by examining trends in credit card issuance and usage. The Quarterly Report and the following analyses are based on data from the New York Fed’s Consumer Credit Panel, which is a nationally representative sample drawn from Equifax credit reports.

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August 01, 2016

Which Households Have Negative Wealth?

Editors’ note: Some numbers related to the relative exposure of households to credit card debt and housing assets have been corrected. (August 2)

LSE_Which Households Have Negative Wealth?

At some point in its life a household’s total debt may exceed its total assets, in which case it has “negative wealth.” Even if this status is temporary, it may affect the household’s ability to save for durable goods, restrict access to further credit, and may require living in a state of limited consumption. Detailed analysis of the holdings of negative-wealth households, however, is a topic that has received little attention. In particular, relatively little is known about the characteristics of such households or about what drives negative wealth. A better understanding of these factors could also prove valuable in explaining and forecasting the persistence of wealth inequality. In this post, we take advantage of a special module of the Survey of Consumer Expectations to shed light on this issue.

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Posted by Blog Author at 7:00 AM in Credit, Household Finance | Permalink | Comments (2)

July 18, 2016

Forecasting Interest Rates over the Long Run

LSE_Forecasting Interest Rates over the Long Run

In a previous post, we showed how market rates on U.S. Treasuries violate the expectations hypothesis because of time-varying risk premia. In this post, we provide evidence that term structure models have outperformed direct market-based measures in forecasting interest rates. This suggests that term structure models can play a role in long-run planning for public policy objectives such as assessing the viability of Social Security.

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June 20, 2016

Risky Business: Government Mortgage Insurance Programs

Editors’ note: The column headings in the final table in this post have been corrected from an earlier version.

LSE_Risky Business: Government Mortgage Insurance Programs

Homeownership has long been a U.S. public policy goal. One of the many ways that the federal government subsidizes homeownership is through mortgage insurance programs operated by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the USDA’s Rural Housing Service (RHS). These programs facilitate home financing opportunities for first-time and low- and moderate-income homebuyers. Virtually all of these government-insured mortgages are securitized by Ginnie Mae, a government agency that guarantees the timely payment of principal and interest of these loans to investors that purchase the securities. That is, the U.S. taxpayers assume the credit risk on these mortgages. In this post, we assess the riskiness of these loans.

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Posted by Blog Author at 7:00 AM in Financial Institutions, Household Finance | Permalink | Comments (0)

June 06, 2016

Is Health Insurance Good for Your Financial Health?

LSE_Is Health Insurance Good for Your Financial Health?

What is the purpose of health care? What is the purpose of health insurance? When people fall ill, they seek health care in order to get better. But insurance has a slightly different function: Its main role is not to protect our health per se, but to protect our finances. For most people, lifetime health expenditures are quite low. However, some people have enormous health costs owing to major illnesses or health conditions. And this is where health insurance comes in—its goal (like that of any other form of insurance) is to protect these individuals against large, and sometimes ruinous, health expenditures. Has the recent health reform served this purpose?

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Posted by Blog Author at 10:00 AM in Household Finance, Inflation | Permalink | Comments (0)

May 24, 2016

Just Released: Hints of Increased Hardship in America’s Oil-Producing Counties

LSE_Just Released: Hints of Increased Hardship in America’s Oil-Producing Counties

Today, the New York Fed released the Quarterly Report on Household Debt and Credit for the first quarter of 2016. Overall debt saw one of its larger increases since deleveraging ended, while delinquency rates for the United States continued to improve and remain at very low levels. Although the overall picture of Americans’ liabilities has continued to improve since the financial crisis, we wondered what the variation looks like at local levels. One advantage of our Consumer Credit Panel (CCP), which is based on Equifax credit data, is that we can examine geographic variation in debt and delinquency rates. Here, we use the CCP to examine the borrowing and delinquency in oil-producing geographies in the United States, where the economic trends since the Great Recession have been very different from those in the rest of the country.

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Posted by Blog Author at 11:05 AM in Household Finance, Housing | Permalink | Comments (5)

May 11, 2016

Household Consumption Mobility over the Life-Cycle

Editors’ note: The y-axis labels on the charts in this post have been corrected to read “Share,” rather than “Percent.”


Commonly used metrics of inequality and mobility attempt to capture how household (or individual) income compares to the rest of the population and how persistent that income is over the life cycle. It can be helpful to think of the income distribution as a ladder—each household is a rung, ranked by its level of income. If household income rankings remain constant over time, this could indicate a low level of mobility in a society. However, income only constitutes one aspect of overall well-being. Another crucial, and potentially more appropriate, dimension is consumption expenditures—how much do people spend on goods and services? In many ways, consumption can be thought of as a proxy for quality of life, since what a household buys says a lot about its access to the necessities of life. Therefore, the analysis of consumption expenditures mobility constitutes a crucial dimension of mobility.

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Posted by Blog Author at 7:00 AM in Household Finance | Permalink | Comments (1)

March 07, 2016

Banking Deserts, Branch Closings, and Soft Information

Editors’ Note: The original version of this post slightly overestimated the fraction of people of all types (low income, minority, etc.) who live in banking deserts. This version reports the correct figures. None of the substantive conclusions were affected. (Updated July 12, 2016)


U.S. banks have shuttered nearly 5,000 branches since the financial crisis, raising concerns that more low-income and minority neighborhoods may be devolving into “banking deserts” with inadequate, or no, mainstream financial services. We investigate this issue and also ask whether such neighborhoods are particularly exposed to branch closings—a development that, according to recent research, could reduce credit access, even with other branches present, by destroying “soft” information about borrowers that influences lenders’ credit decisions. Our findings are mixed, suggesting that further study of these concerns is warranted.

Continue reading "Banking Deserts, Branch Closings, and Soft Information " »

Posted by Blog Author at 7:00 AM in Financial Institutions, Household Finance | Permalink | Comments (0)
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