Consumer leverage ratio

The consumer leverage ratio (CLR) is the ratio of total household debt to disposable personal income.^[1] In the United States these are reported, respectively, by the Federal Reserve (as the household debt service ratio (DSR))^[2] and the Bureau of Economic Analysis of the US Department of Commerce.^{[citation needed]}

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

The concept has been used to quantify the amount of debt an average consumer has, relative to their disposable income.^[3] 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.

^ "ECB guide to internal models" (PDF). European Central Bank. p. 50. The consumer leverage ratio can be calculated as the ratio of total household debt to disposable personal income.
^ "Household Debt Service Payments as a Percent of Disposable Personal Income". Federal Reserve Bank of St. Louis.
^ "Leverage Ratio". Investopedia. investopedia.com. Retrieved 2 December 2015.

[1] "ECB guide to internal models" (PDF). European Central Bank. p. 50. The consumer leverage ratio can be calculated as the ratio of total household debt to disposable personal income.

[2] "Household Debt Service Payments as a Percent of Disposable Personal Income". Federal Reserve Bank of St. Louis.

[3] "Leverage Ratio". Investopedia. investopedia.com. Retrieved 2 December 2015.

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