Bankruptcies rose for the third consecutive year in the United States in 2010 as households continued to struggle even as overall output recovered all of the ground lost during the recession. High unemployment, persisting at double-digit rates in California and San Diego, remained the largest problem.
Households have made progress in reducing some of the debt incurred during the housing boom and credit frenzy. Total debt as a percentage of gross disposable (after-tax) income fell to 113% at the end of last year from its 2007 peak of 127%. Although some of this reduction is due to write-offs by lenders, some of it reflects increasing saving by many Americans.
A major dichotomy has emerged between the reduction in debt burdens among wealthier and poorer families. According to data from Synovate market research, the average wealthy borrower is now carrying a credit card debt of about $3,124 a month, representing a reduction of $326 from the level of two years ago. In contrast, low income households have seen their monthly credit card outstandings climb by $100 over this same period to $2,464.
High unemployment has amplified the debt problems of the poor and the lack of education has been a major factor. Although the job market has slowly improved, the unemployment rate for individuals lacking a high school diploma is 13.9%. In contrast, the jobless rate for those who possess a college degree is 4.3%.
The ripple effects of gaps in education run far and wide.