CBO
TESTIMONY
Statement of
Kim Kowalewski
Chief, Financial and General Macroeconomic Analysis Unit
Macroeconomic Analysis Division
Congressional Budget Office
on
Consumer Debt and Bankruptcy
before the
Subcommittee on Administrative Oversight and the Courts
Committee on the Judiciary
United States Senate
April 11, 1997
|
NOTICE
This statement is not available for public release until
it is delivered at 9:30 a.m. (EDT), Friday, April 11, 1997. |
Mr. Chairman and Members of the Subcommittee, I am pleased to be with
you this morning to present some background information on the broad trends
in nonbusiness bankruptcy filings at the national level. My statement focuses
on the macroeconomic forces that may be driving filings overall, not the
specific forces that drive individual filings. To summarize, I will make
three main points:
-
The rise in nonbusiness bankruptcy filings during the past two years is
not unusual from a historical perspective. Nonbusiness bankruptcies have
increased during previous economic expansions as well.
-
The increase in nonbusiness bankruptcy filings since 1994, like past increases
during economic expansions, mirrors an increase in the indebtedness of
the household sector.
-
The correlation between the increase in nonbusiness bankruptcies and the
increase in the indebtedness of the household sector begs the question,
Why has household indebtedness grown? Economic research does not provide
an answer, but it appears that movements in the indebtedness of the household
sector since World War II reflect long-term trends and economic developments
in that sector as well as in the markets for consumer and home mortgage
credit.
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