Financialization of the U.S. household sector: The 'subprime mortgage crisis' in U.S. and global perspective

摘要

This study focuses on the financialization of the U.S. household sector, featuring enhanced access to credit and ease of consumer spending as essential aspects. Growth in U.S. private consumption has been remarkably strong since the 1980s considering trends in income growth and income and wealth inequalities. Since the mid 1980s the personal saving rate has declined to near zero just before the outbreak of the "subprime mortgage crisis". We find that the decline in saving outside of retirement accounts actually started in the late 1970s, in line with the onset of the era of financialization. Disaggregation by household income shows that the continued decline in household saving in the 1990s was broadly based and included middle-class households as well as rich households, while saving by lower-income households held up in the 1990s but then declined the most in the 2000s. Related to the subprime mortgage boom and property bubble, increased spending by lower-income households provided vital support to the "jobless recovery" of the early 2000s as especially richer households were less inclined to spend in the aftermath of the dot.com bust. Apart from the emergence of the "shadow banking system" as the innovative source of housing finance, we emphasize the role of the U.S. dollar as key global reserve currency and Federal Reserve monetary policies in understanding the financialization of U.S. households in their function as global borrowers and spenders of last resort.