Working Class's Growing Debt Load May Hit ABS, Moody's Says
- Families in lower-income tiers have seen increased debt burden
- Incomes for these households grew just 5% from 2013 to 2016
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Working-class Americans devoted a growing percentage of their income toward paying their debts last year, the first increase since 2010 and a shift that is likely contributing to rising default rates, Moody’s Investors Service said.
The families’ debt burdens are still relatively low compared with earnings-- less than they’ve been for most of the last three decades, according to Moody’s, which released a report Tuesday that analyzed the Federal Reserve’s triennial survey of consumer finances. But the borrowers are accumulating more debt even as the economy continues its recovery, which could create problems for lenders if U.S. growth slows, said Jody Shenn, a senior analyst at the bond grader.