PRESS RELEASE
February 26, 2009

Contacts:
Laura Summers, Research Analyst, Utah Foundation
(801) 355-1400, ext. 6

Stephen Kroes, President, Utah Foundation
(801) 355-1400, ext. 5

GROWTH IN HOUSEHOLD DEBT: AN ANALYSIS OF SAVING AND SPENDING IN UTAH AND THE U.S.

Today Utah Foundation released a research report that examines trends in national saving rates, consumption expenditures, and debt levels and evaluates how Utah compares to these national trends. The report, entitled “Growth in Household Debt: An Analysis of Saving and Spending in Utah and the U.S.,” is available at www.utahfoundation.org. An executive summary is attached to this release and also available on the website.

As the economic recession deepens, many households are taking a closer look at their current financial situation. Saving rates, consumption habits, and debt levels are being reevaluated and changed. However, the amount of debt incurred by U.S. households over the last 20 years will become increasingly difficult to payoff as the economy tightens. Analysis in the report shows Utah households appear to have moderate financial stability compared to the rest of the nation, with some areas of personal finance being more vulnerable to the economic recession than others.  

Following are some highlights from the report:

• The U.S. personal saving rate has been steadily falling since the early 1980s. This decrease is largely due to significant increases in personal consumption expenditures and household debt accumulation.
• Personal Consumption Expenditures as a percent of GDP increased from 62% in 1981 to 70.4% in 2008. This level of consumption had not been seen since 1940.
• In terms of household debt loads, Utah does not appear to be worse than the rest of the nation; however, Utah did follow the same trend of accumulating significant debts during the recent economic expansion, making Utah households vulnerable to the economic recession.
• Between 1980 and 2007, the average amount of non-revolving debt per household in Utah increased by $4,300. Average revolving debt, however, increased from $1,600 to $7,700—more than quadrupling its initial amount. Most of the growth in revolving debt occurred between 1993 and 1996, the same time Utah experienced a boom in home price appreciation.
• Utah has the 19th highest median mortgage debt per borrower in the nation. When this statistic is compared to median household income, however, Utah’s ranking increases even further to 11th highest in the nation.

Regarding the report’s findings, Utah Foundation President Stephen Kroes said, "Many of us want to know how vulnerable Utah’s economy is to the national recession. This report shows that Utahns followed the same trends as the rest of America, in terms of accumulating large debts in the past two decades. These debts will be a burden for Utah’s economy, leaving many families and individuals in difficult circumstances as the economy shrinks."

In regard to debt levels, Utah Foundation Research Analyst Laura Summers said, "It is amazing how rapidly household debt grew in the last two decades. While growth in Utah’s debt was slightly slower, it is obvious many Utah households got caught up in the wealth effect of the recent stock market and housing bubbles—bubbles which have now burst."  

The report is freely available to the public on the web at www.utahfoundation.org.

***

The mission of Utah Foundation is to promote a thriving economy, a well-prepared workforce, and a high quality of life for Utahns by performing thorough, well-supported research that helps policymakers, business and community leaders, and citizens better understand complex issues and providing practical, well-reasoned recommendations for policy change.