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2011 Annual Report

FOUR FORCES THAT
SHAPED THE ECONOMY IN 2011

Household deleveraging steadily progressed


Household finances improved somewhat in 2011 as consumers continued to pay down debt. Federal Reserve measures of household financial obligations ratios (FOR) reached their lowest levels since the mid-1980s. See the chart.

Personal income barely grew until the end of the year, so the primary way consumers lowered their debt was through saving more and spending less than they had in previous years.

Sidebar: Region's households followed the nation's

chart


The behavior of southeastern consumers largely followed the same pattern as the rest of the nation's consumers, as gauged by sales tax collections. As a broad measure of retail activity, sales tax collections in the southeastern states rose in 2011. Georgia and Tennessee reported particularly strong year-over-year gains in sales tax collections late in 2011. However, the pace of growth in most states in the region was slower in the second half of the year. See the chart.

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Because consumer spending typically accounts for nearly 70 percent of the U.S. economy's total demand, this save-more-spend-less process likely contributed to the slower rate of growth overall. Consumer spending merely inched forward for the year, as real personal consumption expenditures rose just 2.2 percent from 2010, according to the U.S. Bureau of Economic Analysis.