quote:
Maybe. I’ve read a lot of your posts on here and you seem to discount debt servicing as a whole compared to previous cycles. While I appreciate CC debt is high and expensive, total debt service is near long term lows …

I realize real wages are down, but not enough to swing that to a level that is remotely approaching GFC level.

Yeah, I was looking at that earlier today. I don't mean to discount it, but it's so incongruous with the increase in consumer debt, the interest rates, delinquencies and the lethargic movement of real wages that I'm just not sure what to make of it. That uncertainty increases when we take the rise in GDP and slowly draining personal savings into account.

If those stats were reversed I would say consumers were focusing heavily on fiscal responsibility (and we would likely see the GDP suffer because of it), but this? Within the context of everything else I have to wonder if it has something to do with how they calculate it (including nonprofits, for instance).

So I dug into it a little tonight since I had some time...

The formula used is (series FA154104023 (debt service payments) / series FA156012005 (disposable income)) * 100. If we look at the amounts of those two series we see a constant climb in both debt servicing payments and disposable income going back to Q1 2022.

Here's what those numbers look like as a percent change from quarter to quarter.

While we see the rate of growth in debt servicing drop we see the rate of growth of disposable income drop even more. If we take that into context with slowly dropping personal savings and rising credit card delinquencies, I have to wonder if that stat isn't telling us that consumers are at the beginning of starting to walk away from at least some of their debt in lieu of continuing to spend from the credit still available to them (and supplementing that with savings) as their disposable income shrinks?

If a debt simply isn't serviced, does it count in that chart?