The latest from the Fed Consumer Finance Survey comes with a caveat: the data measures a period that may seem distant and distant – the time before COVID, of course. But they are showing a growing interest in online banking, an attempt to grow their savings – and higher debt loads.
At a high level, the Federal Reserve noted, between 2016 and 2019, real gross domestic product grew at an annual rate of 2.5%, while the overall (civilian) unemployment rate fell from 5% to 3%. %. Median family income rose about 5% in the three years to 2019, to about $58,600.
“Improvements in economic activity along with rising home and business stock prices have combined to support the continued increase in median and average family net worth (wealth) between 2016 and 2019,” the report noted. Fed. Housing has certainly contributed to the increase in wealth, rising more than 5% per year, while stock markets have increased by double digit percentages from 2016 to 2019.
Between 2016 and 2019, the proportion of all families who saved increased from 55% to 59%. Transaction accounts – which the Federal Reserve says include checking, savings, money market, calling accounts and prepaid debit cards – remained the most common type of financial asset held in 2019 This ownership rate was over 98%, increasing from 2016 to 2019. at a median value up 11% to $5,300.
At least some of the improvements in financial condition may also be due to private business ownership. The Fed noted that, overall, about 13% of surveyed families owned a business.
“Business ownership increases with income, and nearly 40% of families in the top decile of the income distribution owned a business,” the Fed reported.
Ownership of at least some type of financial asset was commonplace during the period measured. Overall, 98.7% of families in 2019 owned at least one financial asset – which includes transaction accounts, certificates of deposit, savings bonds, other bonds, stocks and other assets .
Online banking
The Fed also looked at whether the use of online banking services from 2016 to 2019 reduced the use of banking services in a physical setting.
“Even families who used online banking continued to use at least some physical financial services, such as visiting local bank branches,” the Fed found.
Even among families who used online banking, 79% visited their current account branch and 67% visited their savings account branch in 2019.
The debt burden
The data shows that the debt burden has increased over this period, after decreasing from 2010 to 2016 and measured by various ratios – leverage, debt to income and payment to income. “Most of these ratios increased slightly between 2016 and 2019, implying that families faced somewhat higher indebtedness…However, these ratios remain below their levels just before the financial crisis of 2007-2008. In 2019, the median debtor leverage ratio was slightly below its 2007 level at 33.9%; The median debt-to-income and debtor-payment-to-income ratios in 2019 — at 95.7% and 15.3%, respectively — were well below 2007 levels,” the Federal Reserve said.
Regarding debt service, the Fed reported that in 2019, 12.3% of families surveyed said they were in arrears, up from 13.5% in 2016 and leagues below 20.8 % in 2007.
PYMNES research has revealed that over 59% of consumers live paycheck to paycheck and have almost less than $2,500 in savings.
“The percentage of families reporting being 60 or more days overdue increased from 5.8% in 2016 to 4.6% in 2019, well below the recent peak of 8.1% in 2010,” according to the Fed.
