Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Many U.S. families are underwater with debts: U-M study

09.05.2012
As the country emerges from the Great Recession, a substantial number of U.S. families are underwater – and not just with their mortgages.
According to a new University of Michigan report (PDF), about one out of every five U.S. households owe more on credit cards, medical bills, student loans and other non-collateralized debts than they have in savings and other liquid assets.

The report also predicts continuing trouble ahead with home mortgages, with 1.7 percent of families surveyed in 2011 saying that it is “very or somewhat likely” that they will fall behind on their mortgage payments in the near future. This represents an improvement from 2009 when 1.9% of families had such expectations.

“Our data suggest that the mortgage crisis will continue for the next few years, although a somewhat smaller share of families will experience mortgage distress” says Frank Stafford, an economist at the U-M Institute for Social Research (ISR) and co-author of the report with U-M researchers Bing Chen and Robert Schoeni.

“And even though average savings levels have gone up since 2008, our data show that there has been no improvement in financial liquidity between 2009 and 2011, except among families with more than $50,000 in savings and other liquid assets.”

The report is based on an analysis of home ownership, mortgage and other debt, and financial resources among the same 8,121 families interviewed before and after the downturn. The families were interviewed as part of the ISR Panel Study of Income Dynamics, the longest running longitudinal household survey in the world.

Among the key findings:

About 3.5 percent of families owned a home and were behind on their mortgage payments in either 2009 or 2011, or in both years. While these percentages are low, the number of families affected is significant – approximately 4,100,000 on a national level.

The proportion of families with no savings or other liquid assets rose to 23.4 percent in 2011, from 18.5 percent in 2009.

About the same percentage of families in 2009 and 2011 had $30,000 or more in credit card and other non-collateralized debts (8.5 percent vs.10 percent) and about the same proportion (48.0 percent vs. 47.4 percent) had no such debt in both years.

“Some families have not been able to make substantial headway,” says Stafford. “Even if they’re not underwater with their mortgages, they are struggling to save money and reduce their debts.”

Stafford says the situation today follows a scenario described by the 1920s economist, Irving Fisher. “In Fisher’s Debt Deflation Theory of Great Depressions, he predicted that when people are optimistic about a broad investment category, as they were before the Great Depression and now in the housing bubble of the Great Recession, there is a companion rise of excessive indebtedness. Once the bubble in the underlying asset has burst there is a rush to safe assets as in 2009-2010. In short, as the inevitable collapse happens, they rush to get rid of their debt and start saving more.

“It’s a classic response to economic uncertainty. But the problem is that today only those families who have more than $50,000 in liquid assets have actually been able to do this to any extent. The rest of American families are simply treading water, if they’re lucky.”

Contact: Diane Swanbrow
Phone: (734) 647-9069

Diane Swanbrow | EurekAlert!
Further information:
http://www.umich.edu

More articles from Business and Finance:

nachricht Preferential trade agreements enhance global trade at the expense of its resilience
17.02.2017 | International Institute for Applied Systems Analysis (IIASA)

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Breakthrough with a chain of gold atoms

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

In the field of nanoscience, an international team of physicists with participants from Konstanz has achieved a breakthrough in understanding heat transport

Im Focus: DNA repair: a new letter in the cell alphabet

Results reveal how discoveries may be hidden in scientific “blind spots”

Cells need to repair damaged DNA in our genes to prevent the development of cancer and other diseases. Our cells therefore activate and send “repair-proteins”...

Im Focus: Dresdner scientists print tomorrow’s world

The Fraunhofer IWS Dresden and Technische Universität Dresden inaugurated their jointly operated Center for Additive Manufacturing Dresden (AMCD) with a festive ceremony on February 7, 2017. Scientists from various disciplines perform research on materials, additive manufacturing processes and innovative technologies, which build up components in a layer by layer process. This technology opens up new horizons for component design and combinations of functions. For example during fabrication, electrical conductors and sensors are already able to be additively manufactured into components. They provide information about stress conditions of a product during operation.

The 3D-printing technology, or additive manufacturing as it is often called, has long made the step out of scientific research laboratories into industrial...

Im Focus: Mimicking nature's cellular architectures via 3-D printing

Research offers new level of control over the structure of 3-D printed materials

Nature does amazing things with limited design materials. Grass, for example, can support its own weight, resist strong wind loads, and recover after being...

Im Focus: Three Magnetic States for Each Hole

Nanometer-scale magnetic perforated grids could create new possibilities for computing. Together with international colleagues, scientists from the Helmholtz Zentrum Dresden-Rossendorf (HZDR) have shown how a cobalt grid can be reliably programmed at room temperature. In addition they discovered that for every hole ("antidot") three magnetic states can be configured. The results have been published in the journal "Scientific Reports".

Physicist Dr. Rantej Bali from the HZDR, together with scientists from Singapore and Australia, designed a special grid structure in a thin layer of cobalt in...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

Booth and panel discussion – The Lindau Nobel Laureate Meetings at the AAAS 2017 Annual Meeting

13.02.2017 | Event News

Complex Loading versus Hidden Reserves

10.02.2017 | Event News

International Conference on Crystal Growth in Freiburg

09.02.2017 | Event News

 
Latest News

Biocompatible 3-D tracking system has potential to improve robot-assisted surgery

17.02.2017 | Medical Engineering

Real-time MRI analysis powered by supercomputers

17.02.2017 | Medical Engineering

Antibiotic effective against drug-resistant bacteria in pediatric skin infections

17.02.2017 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>