Another question that is frequently asked is whether financial stress in the household sector might restrain growth. Specifically, some argue that the high level of consumer debt might mean that households will be unable to increase spending substantially for some time to come.
To be sure, the debt service burden is quite high by historical standards, and personal bankruptcies moved up in 2001 and 2002. However, households have been converting their more expensive, non-tax-deductible debt  BIS Review 24/2003  3  into mortgage debt, which has helped keep the debt service burden fairly stable during the past few years.