Consumer Leverage Ratio is a term popularized by William Jarvis and Dr Ian C MacMillan in a series of articles in the Harvard Business Review and refers to the ratio of total household debt, as reported by the Federal Reserve System to disposable personal income, as reported by the US Department of Commerce, Bureau of Economic Analysis.

The term in a variety of other forms has been used to quantify the amount of debt the average American consumer has, relative to his/her disposable income. As of Q2 2009, the ratio stood at 1.26x. The historical average ratio since 1975 is approximately 0.9x.

Many economists argue the rapid growth in consumer leverage has been the primary fuel of corporate earnings growth in the past few decades and represents significant economic risk to the US economy. Jarvis and MacMillan quantify this within specific businesses and industries in a ratio form as Consumer Leverage Exposure (CLE).

As reported by data from the Bureau of Economic Analysis and the Federal Reserve, below are recent historical Consumer Leverage Ratio levels:

Quarter	Ratio
Q1 2007	1.28x
Q2 2007	1.29x
Q3 2007	1.30x
Q4 2007	1.30x
Q1 2008	1.31x
Q2 2008	1.26x
Q3 2008	1.28x
Q4 2008	1.28x
Q1 2009	1.28x
Q2 2009	1.26x

[edit] See also

• Bureau of Economic Analysis
• Consumer
• Consumer debt
• Consumer economics
• Economic indicators
• Federal Reserve System
• Harvard Business Review

[edit] Other References

• Consumer Credit: The Next Crisis [1]
• HBR Editor's Blog [2]
• HBR Editor's Blog [3]
• Harvard Business Review [4]
• Harvard Business Review, October 2009 [5]
• Harvard Business Review Toolkit [6]
• Harvard Business Review CLE Calculator [7]
• Rita Gunther McGrath's Blog [8]
• The Narrow Bridge Blog by Anya Kamenetz[9]
• WSJ Blog: Real Time Economics [10]