Consumer debt and unemployment

ABSTRACT

We present evidence that US consumer debt has varied inversely with unemployment rates since 1990, potentially reflecting responses by households and/or lenders to adverse labour market conditions, and helping explain why consumer debt recently fell despite low interest rates. For several measures of debt, unemployment exhibits greater explanatory power and economic significance than interest rates.

KEYWORDS:

• Consumer debt
• unemployment
• interest rates
• recessions

JEL CLASSIFICATION:

• E20
• B22

Disclosure statement

No potential conflict of interest was reported by the authors.