The recession forced many households to cut down on their debt. N.C. State University economist Mike Walden considers how successful this effort has been and who has been most successful.
“Well, first of all … it’s been very successful. Since the start of the recession – this goes back 2007 – American households (you, me, all of our other fellow households in the country) have reduced their debt selectively by $1.2 trillion – $1.2 trillion. Also, the percentage of households who have any debt at all as gone down from 73 percent of all households to 69 percent of all households. So, yes, we have seen great strides in reducing debt.
“Now in terms of who has done it, if we look at households by age, we see that middle-aged households and young households collectively have made the greatest stride in reducing their debt. Older households – people, households over age 55 – have done the least. However, those households tend to be retired. They tend to be living off of, perhaps, pensions and Social Security sources that are not as volatile.
“Also, older households have the lowest percentage of having any debt at all. So, collectively I think this is very good news in terms of households getting out of debt.”