U.S. Consumer Debt / U.S. Population = $43,100 per person | Hacker News Reader

U.S. Consumer Debt / U.S. Population = $43,100 per person

wolframalpha.com

19 pointsvlucas33 comments

That's not the consumer debt figure. Consumer debt, which is credit cards and other unsecured, mostly high interest debt, is $2399 billion.

http://www.federalreserve.gov/releases/g19/current/default.h...

That comes to $2399 billion / 307 million people = $7814 per person.

Sounds a bit more accurate, but pretty much just as scary. If you add in your share of the national debt, it gets really scary. Politicians likely won't have the backbone to deal with making cuts/raising taxes so the likely outcome is sustained inflation.

On the plus side, the majority of the national debt is owed to people and bodies within the country; in essence, the government representing the people has borrowed from those people on behalf of those people.

Just to give the full number the average Californian owes $132,655 with National Debt, State Debt and Consumer Debt (including mortgage, car, etc...)

U.S. Debt: http://www.usdebtclock.org/index.html

California Debt:http://www.usdebtclock.org/state-debt-clocks/state-of-califo...

Consumer Debt: http://www.youngmoney.com/get_out_of_debt/california-leads-n...

(Though that doesn't include the estimated $1,012,540 per citizen in unfunded liabilities)

Let's not conflate "unfunded liabilities" with actual current debt load though. While both dollar figures, they are wildly different in nature.

I specifically didn't include them in the total for just that reason

Yes, but when Social Security money suddenly doesn't show up for a whole generation of people depending on it to retire, and in many cases no longer able bodied to work, the turmoil will be plenty upsetting.

National Debt has become an imaginary number. I don't owe a cent on it. Let the banksters pillage the economy and try to collect on a nation of bankrupt people with rifles.

It's as serious as a heart attack. Everyday billions of dollars, which represent immense man power and dedication, are spent in pursuit of the unearned. That means the goods and services you buy today are more expensive because every dollar you spend is competing with all that borrowed money. That alone is plenty bad.

I won't even begin to talk about the repercussions of bankruptcy (or runaway inflation) that you shrug off. Modern day Greece, pre-WWII Germany, Zimbabawe aren't/weren't tourist destinations for a reason.

While consumer debt does include mortgages, the term covers about any other form of credit given to consumers. Consumer debt includes secured debt as well, such as auto loans and certain kinds of household goods such as furniture, appliances, etc.

Looking at the figures you linked, you've got $800.5b in REVOLVING debt, which is the unsecured, credit-card type debt people are really worried about. That works out to $6,971 per household (114,825,428 households) or about $2,600 per capita.

The non-revolving, or installment debt, typical of auto, furniture, and appliance loans, is about twice as large, at $1,598b, or $13,916 per household and $5,708 per capita.

Nowhere near as bleak as they'd like to paint it.

If I spend N thousand dollars on my credit card per month and pay it off every month, does my contribution to revolving debt show up as $N thousand, $N/2 thousand, or zero?

If they track it by using consumer credit reporting bureaus, they track your balance as the amount shown on your last bill, regardless of if it was paid in full or not. If that is the case, I would assume a decent chunk of this is debt that no interest is being paid on as well.

Very interesting point, this might be almost nothing at all then.

This has to be mostly mortgages, which makes it a little misleading.

Why is it misleading?

Generally, mortgages are an amount less than an asset someone has. It would be kind of absurd to consider a person with a $500k house and $50k in outstanding mortgage to be worse off than a person with $0. Mortgages also generally (depending on the state) are non-recourse; if your mortgage is for more than the property is worth, you can hand in your keys and walk off with no additional liability.

I agree from a cashflow perspective, a mortgage even if you have substantial equity can be bad, but most people don't get into debt trouble from mortgages, unless they got some kind of absurd mortgages for close to the value of the property, resetting ARMs, and fundamentally have more house than they otherwise would have purchased. True, a lot of people did this, but it's a historical anomaly.

But I'm sure you knew all that and were just trying to make a point :)

So it's misleading because they listed debt rather than net worth? I'm not sure "misleading" is the right term - I'd use "a correct number, properly labelled, but which answers a different question than the question rdl wants answered".

Incidentally, I'm not sure why mortgage debt is more misleading than other debt. If I have $500k in the bank but owe $50k on an auto loan or credit card, is that somehow worse than owning a $500k house with $50k mortgage debt?

As for the call-option nature of loans, that only applies in a few states (admittedly including CA and TX), and only to some loans (mostly only the first loan). While you are probably right that some mortgages should be excluded for this reason, I'd be surprised if they were the majority.

The reason mortgage debt is better is because the asset borrowed tends to appreciate (although obviously not in the past 5 years) whereas with a car loan or credit card the asset(s) depreciate quite rapidly, on top of the fact that the interest is much higher and not tax deductible.

A mortgage is also potential equity whereas your credit card debt is not. I'm going to pay to live somewhere (rent or mortgage). If I have mortgage debt, that 'rent' payment is becoming ownership. In addition, the interest on that debt is deductible so, to some degree, it comes out in the wash (so to speak).

This says consumer debt, which I assume excludes mortgages, right?

More than a little. And I didn't think consumer debt included debt used for investments like a mortgage, so it seems like this is just a case of wolfram alpha not interpreting a query correctly.

by definition, mortgage is still a debt

Yes, but it's a special kind of debt. There's a reason why you pay 25% interest on credit cards and 4% on your house.

Mortgage debt is secured.

I actually think this is an incorrectly attributed number.

If you multiply $43,100 * 300 Million people (remember the population number is 2008) you get around $12.9 Trillion dollars. That's around where the National Debt Clock would have been in Q3 2010 (http://www.usdebtclock.org/)

So this is each U.S. citizen's share of the U.S. National debt not Consumer Debt

I was a bit disappointed that when I changed the "s" to "k" (and tried variations on that theme), Wolfram didn't have the answer.

I want to like WA, but I feel like its data is so sparse and often spiked just for demos like this. I'd really love to use WA to do a consumer debt comparison for the western world, but they don't ingest most other country data.

Is there an investment opportunity around this number?

For example, $43,100 in consumer debt per capita seems totally unsustainable, and one way it might get corrected is through very high inflation, which would make our past debt more reasonable by comparison. So investments that perform well in inflationary periods would make sense... Other ideas?

Given that the number is incorrect, basing investment strategy on it would not be the wisest idea around.

Is it even possible to bring this figure down to $0?

My economics study ended in high school, but I doubt it would be beneficial to bring it down to $0.

currency is built on debt

For comparison: US GDP per capita is roughly $46,000.

Pretty sure we can keep spending money on Zynga/iphone games just a little bit longer....before we can't afford food/gas.

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