In Charts: How American Household Finances are Changing
How American Household Finances are Changing
Visualizing shifts in income, savings, debt, and spending
The Chart of the Week is a weekly Visual Capitalist feature on Fridays.
Every year, Silicon Valley patiently waits for Mary Meeker from Kleiner Perkins to share her famous Internet Trends report.
The latest rendition came out two days ago. As usual, the 294-slide deck is a treasure trove of the the latest data on technology and internet trends.
But while the report is well-known as a barometer on the internet, it also features some high-level data on the U.S. economy that we found interesting. As a result, we used some of the most compelling slides to put together this week’s chart on how American household finances are changing – and we greatly thank Mary for doing the heavy lifting.
From Peak to Peak
In 2007, real median household income had a local peak of $58,149, and then fell off a cliff at the same time as the credit cycle, which reached its own peak in 2008 Q3 as the financial crisis set in.
Real median household income bottomed in 2012, and then debt followed in 2013.
Looking at the most recent year of data available, both categories are now back above pre-crisis highs. Real median household income has now surpassed its all-time record in 1999 – and total household debt has topped $13 trillion in 2018 Q1, more than $500 billion higher than its previous peak in 2008.
A Closer Look
While consumer debt is similar in terms of total size from a decade ago, the composition has changed considerably.
Mortgage debt, which makes up the vast majority of consumer debt, is still actually down from its 2008 peak by 4%. Replacing that is other forms of debt, including student loans:
| Non-Housing Debt | 2008 Q3 ($T) | 2018 Q1 ($T) | Change |
|---|---|---|---|
| Credit Card | $0.86 | $0.81 | -6% |
| Auto Loan | $0.81 | $1.23 | 52% |
| Student Debt | $0.61 | $1.41 | 131% |
| Other Non-Housing Debt | $0.41 | $0.39 | -5% |
Since 2008, student loan debt has surged by 131% – and auto loans by 52%. Mortgage debt, credit debt, and other non-housing debt have not yet crawled back to pre-crisis peaks.
Saving and Spending
Looking at the longer-term trend, Americans are borrowing more and saving fewer dollars.
In the 1970s, both rates were about the same as a percentage of income, falling in a range between 13-15%. Today, the savings rate is below 5%, and debt-to-annual income ratio has risen to 22%, according to Meeker.
What are American households spending money on?
| Category | 1972 | 1990 | 2017 |
|---|---|---|---|
| Shelter | 12% | 15% | 17% |
| Taxes | 15% | 9% | 15% |
| Transportation | 14% | 16% | 14% |
| Food | 15% | 15% | 12% |
| Household Operations | 11% | 12% | 11% |
| Pensions & Insurance | 7% | 8% | 10% |
| Healthcare | 5% | 5% | 7% |
| Entertainment | 6% | 5% | 4% |
| Apparel | 5% | 5% | 3% |
| Other | 9% | 9% | 8% |
Notably, households are spending more on shelter and healthcare – meanwhile, the cost for food, entertainment, and apparel are decreasing over time.
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