Since mid-2005, the personal saving rate has been negative, implying levels of aggregate consumer spending that outstrip disposable income. The personal saving rate stood at –1.0 percent in the first quarter of 2007. Despite such low personal saving rates, the wealth-to-income ratio has trended upward since early 2003. Although gains from rising house prices slowed in 2006, rising equity prices contributed strongly to increases in household wealth.
Growth in home mortgage debt moderated in the fourth quarter of 2006, after having grown at double-digit rates since late 2001. Total consumer credit growth rose in the first quarter of 2007, fueled mainly by an increase in revolving credit. Most of this increase was attributed to strong retail sales (other than for autos) and rising gasoline prices. Purchases of these kinds often are made with credit cards.
clipped from www.clevelandfed.org
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