Study finds mild credit cycle in NY
A recent New York Fed study shows that the New York-Northern New Jersey region experienced a relatively mild credit cycle compared with the nation as a whole, although pockets of financial stress exist.
In their study, economists Jaison Abel and Richard Deitz examine the increase and decline in household debt over the recent credit cycle for areas in the New York-Northern New Jersey region. The authors begin their analysis by examining the rapid increase in U.S. household debt that occurred over the 2000s, and show that the places that accumulated the most debt tended to be areas where the housing boom was strongest. With the onset of the Great Recession and financial crisis, household finances came under increasing pressure, and households began a process of deleveraging.
In the New York-Northern New Jersey region, household debt levels generally did not rise as rapidly as the U.S. average, though in some places, debt burdens reached particularly high levels. In addition, the deleveraging process, while significant, has been less pronounced in the region than in other parts of the country. Nonetheless, the authors also show that financial stress.