The Current State of U.S. Household Balance Sheets

The Board of Governors of the Federal Reserve System is responsible for two of the most widely used datasets containing information about U.S. household balance sheets: the quarterly macro-level Financial Accounts of the United States (FA, formerly known as the Flow of Funds Accounts) and the triennial microlevel Survey of Consumer Finances (SCF). The FA is very timely, but the data can be used only to describe the household sector as a whole. The SCF provides the micro-level detail needed to capture heterogeneity in household finances, but the data are available only with a long lag. The authors’ key contribution in this article is their use of the FA dataset and other macro data sources to “age” the micro- level SCF data forward through time to generate a representative sample for current-quarter policy analysis. They use this aging approach to compare and contrast pre- and post-recession trends in key indicators, such as net worth, debt-to-income ratios, debt service-to-income ratios, and housing loan-to-value ratios across families grouped by characteristics including income, age, and geography.