Released: November 26, 2006

Spending more than we make

Source: David Lazarus, San Francisco Chronicle

If you’re like most people, you’ll be giving your credit cards a healthy workout over the next few weeks. So this is as good a time as any to consider a few harsh realities.

First off, the Center for American Progress, a liberal-minded think tank, has crunched data from the Federal Reserve and found that Americans for the first time owe more money than they make.

According to the center, average household debt levels topped average after-tax income by more than 29 percent as of this summer. Moreover, the average family is now spending 14.4 percent of its disposable income on debt repayments—the largest share since the Fed began collecting such data in 1980.

“This is an unsustainable trend,” said Christian Weller, senior economist at the center. “People simply can’t borrow at the same rate they’ve borrowed in the past.”

According to the Fed, total consumer credit debt, excluding mortgages, hit a record $2.4 trillion in September. Factoring in mortgages, outstanding household debt soars to about $12.3 trillion.

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