Consumer leverage ratio

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Consumer leverage ratio" – news · newspapers · books · scholar · JSTOR (June 2010) (Learn how and when to remove this message)

The consumer leverage ratio is the ratio of total household debt to disposable personal income.^[1] In the United States these are reported, respectively, by the Federal Reserve and the Bureau of Economic Analysis of the US Department of Commerce.

${\displaystyle {\mbox{Consumer leverage ratio}}={{\mbox{Total household debt}} \over {\mbox{Disposable personal income}}}}$

The concept has been used to quantify the amount of debt an average consumer has, relative to their disposable income.^[2] In essence, the consumer leverage ratio demonstrates how many years it would take an average consumer to pay off their debt if their entire annual disposable income went toward it.