Americans ran up significant levels of debt between 2001 and 2004, according to a government survey. In this light, Citigroup Global Markets analysts warned investors to avoid subprime unsecured debt, although they did acknowledge that U.S. consumers were able to afford their debt loads.
The Federal Reserve's Triennial Survey of Consumer Finance, released in February, presented data on net worth, income, asset and liability by income groups in the U.S. In terms of American's debt loads, families in the 59.9 income percentile doubled their debt to worth ratios. However, that group also increased their income, by $43,200, or 1.6%. Citigroup said that the ratio of median debt payments to median family income increased by almost 8% nationally, and said the biggest increases came from consumers in the 20 to 59.9 and 80 to 89.9 percentiles. Those groups can afford to take on the extra debt, because they have more financial reserves than income groups below them, said Citigroup, which culled several key points from the survey in its Bond Market Roundup: Strategy. Overall, the amount of debt as a percentage of assets rose significantly, and stands at the highest level, 15%, in 15 years.