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Household debt meets corporate debt

Households take on debt for a variety of reasons, such as financing education and purchasing a house. Household debt in the U.S. increased from 59% of GDP in 1990 to 98% of GDP in 2009, and many economists argue that the Great Recession was “Great” because household leverage was so high at the time. It has since declined steadily. In fact, in 2019, household debt and corporate debt were the closest they have been in nearly 30 years.

The FRED graph above shows both series as a percentage of GDP: household debt and corporate debt. Household debt has exceeded corporate debt since the early 1990s, and this difference was particularly large in the years leading up to the Financial Crisis of 2008. For instance, in the third quarter of 2006, household debt was greater than corporate debt by as much as 31% of GDP. In the years since the Great Recession, however, U.S. household debt has steadily decreased. This decline, accompanied by an increase in corporate debt since 2012, has reduced the gap between household and business debt. In fact, in the last quarter of 2019, household debt and corporate debt were both around 74% of GDP.

What has driven this decrease in household debt? There are many types of household debt: mortgages, student loans, auto loans, credit card loans, etc. The second FRED graph decomposes household debt into some of these categories and shows that the decrease in household debt is driven primarily by the decline in mortgages over the recent decade. Auto loans have remained stable as a percentage of GDP; student debt has increased slightly, but not nearly enough to offset the large decrease in mortgage debt.

How these graphs were created: First graph: Search for and select “Nonfinancial Business; Debt Securities and Loans; Liability; Level.” From the “Edit Graph” menu, add the series “Households and Nonprofit Organizations, Debt Securities; Liability, Level.” For both lines, add the second series “Gross Domestic Product, Billions of Dollars, Seasonally Adjusted Annual Rate.” To rescale the series as a percentage of GDP, change the formula to (a*100/b) in the formula bar. Second graph: Search for and select “Households and Nonprofit Organizations, Debt Securities; Liability, Level.” From the “Edit Graph” tab, search for and add each of the following FRED series IDs: HHMSDODNS, MVLOAS, SLOAS. For each line, also add the series for GDP and then change the formula to (a*100/b).

Suggested by Asha Bharadwaj and Miguel Faria-e-Castro.

View on FRED, series used in this post: CMDEBT, GDP, HHMSDODNS, MVLOAS, SLOAS, TBSDODNS

Medical services spending

A look back at expenditures on treating diseases in the U.S.

The FRED Blog has covered healthcare before. (See the list of related posts below.) In this post, we look at pre-pandemic data on medical services spending in the U.S., specifically by category of illness.

Per the Bureau of Economic Analysis (BEA): “To better measure spending trends and treatment prices, BEA developed a set of supplemental statistics called the Health Care Satellite Account. These statistics give policymakers, researchers and the public another way of understanding the economics of health care. The satellite account measures U.S. health care spending by the diseases being treated (for example, cancer or diabetes) instead of by the types of goods and services purchased (such as doctor’s office visits or drugs).”

These data, available for 2000-2016, allow us to compare per-person expenditures on medical services across different diseases. The FRED graph above shows that expenditures per person on infectious and parasitic diseases (red bars) was, until 2015, smaller than expenditures per person on mental health diseases (green bars). By the way, the values are adjusted for changes in the general cost of living measured through the consumer price index (CPI).

The BEA data also allow us to see how the prices for treating different diseases have changed over time. Those prices are measured through an index number, so we can compare their rates of growth, not their levels in dollars and cents.

The FRED graph above shows that the average cost of medical services related to infectious and parasitic diseases (red line) rose faster than the average cost of all diseases (dashed blue line). The latter includes the cost of medical services related to mental health diseases (green line), which rose more slowly than average.

For a complete list of price indexes for medical services expenditures by disease, go to FRED and click on “Browse data by: Source” underneath the search bar. Scroll down the alphabetical list for “U.S. Bureau of Economic Analysis” and click on the name. Next, click on “Health Care Satellite Account > Health Care Blended Account > Expenditures Price Index, Annual.”

Related posts

How these graphs were created: Follow the instructions above to find the series. To get the bars in the first graph, go to the “Edit Graph panel: From the “Format” tab, select graph type “bar” with no stacking.

Suggested by Diego Mendez-Carbajo.


Eating out or staying in? FRED says bon appétit

The FRED Blog has used data from the Census Bureau’s advance retail sales release table to compare the choice of spending outlets over time and to plot the relationship between gasoline prices and sales at gasoline stations. Today we use the “advance retail sales” data available for March 2020 to show another dimension of the social distancing required to manage the spread of COVID-19.

In the FRED graph above, the data show fairly steady growth of retail sales at restaurants and bars (the black line) catching up to retail sales at food and beverage stores (the red line) in August 2018. Note that to be able to compare sales figures over time, those figures are adjusted for the cost of living. The very last observations look like vertical lines because social distancing has dramatically switched consumer demand for restaurants and bars—almost dollar for dollar—to food and beverage stores. Keep in mind that the reported sales at restaurants and bars include the food prepared there for take-out.

If you look closely, you’ll notice the decrease in retail sales at restaurants and bars during 2009, as the Great Recession peaked and economic activity started to recover. During that time, there was no uptick in retail sales at food and beverage stores, though. Finally, although this FRED Blog post describes advance retail sales, an earlier post has compared those with retail sales and found them to be identical.

How this graph was created: Search for “Advance Retail Sales: Food Services and Drinking Places.” From the “Edit Graph” panel, open the “Add Line” tab and search for “Advance Retail Sales: Food and Beverage Stores.” Next, to adjust the sales figures for the cost of living, customize each line by searching for “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average (CPIAUCSL)” and clicking on “Add.” Then, further customize the lines applying the formula (a/b)*100. Edit the graph colors and salt to taste.

Suggested by Diego Mendez-Carbajo.

View on FRED, series used in this post: CPIAUCSL, RSDBS, RSFSDP

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