Canadian Investment Review

Denmark > U.S. in Household Debt

Written by Caroline Cakebread on Tuesday, February 9th, 2010 at 1:25 pm

real estate chartThe U.S. lags at least a few European countries when it comes to household leverage according to a study in the latest Economic Letter from the Federal Reserve Bureau of San Francisco. Since the US has been the poster child for consumer debt, their showing versus other industrialized nations is surprising – in fact, it’s Denmark who’s actually in the lead. The key to the trend seems to lie in the price of housing. The paper, called “Global Household Leverage, House Prices, and Consumption,” finds that household leverage in the United States and many other industrialized countries increased steeply in the decade prior to 2007 and those countries with the biggest increases saw housing prices rise the fastest during the same period. At the same time, those countries also experienced the biggest drops in household consumption once house prices started falling.

Canada is not on the list.

Read the full paper here:

http://www.frbsf.org/publications/economics/letter/2010/el2010-01.html

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