Americans are using a record-low portion of their disposable income to pay down debt

• The level of household income being used to service debt just hit a record low, per the Fed.
• It dropped to 8.2% in the first quarter of 2020, the lowest level since it was first tracked in 1980.
• On the other hand, consumer spending is rebounding quickly as states relax pandemic restrictions.

The level of Americans using their income to pay debts down has hit a new low, per a new release from the Federal Reserve.

The measure, known as the household debt service ratio, is typically used to illustrate the share of household income being spent to cover mortgages and other types of consumer debt. The Fed said Wednesday the rate dropped to 8.23% in the first quarter, the lowest level recorded since it was first tracked in 1980.

It previously stood at 9.36% in the fourth quarter of 2020. The previous low was at the second quarter of 2020 as the pandemic shut down swathes of the economy. While it's unclear why Americans are contributing so little of their income toward debt, various other indicators signal they are more focused on spending.

For one, disposable incomes surged in the pandemic, partly stemming from lawmakers approving several federal rescue packages to keep families afloat in the wake of substantial job losses. The government response included direct payments to most households along with a weekly federal supplement to unemployment benefits.

The influx of federal cash allowed many households to amass savings. Economists say that's helping to fuel consumer spending as states relax distancing restrictions and more people get vaccinated. The nonpartisan Congressional Budget Office is forecasting a 7% growth in gross domestic product this year.

A separate poll from Gallup on Wednesday indicated that the percentage of Americans who consider themselves to be "thriving" has climbed to 59%, the highest-ever level since first recording it in 2008.

Finally, the Federal Reserve has kept the benchmark interest rate near-zero as an emergency measure, lowering borrowing costs across several different markets, with mortgage rates hitting several record lows throughout 2020 and remaining low in 2021. This has helped spark a land rush of sorts, as Americans nationwide have driven up the average home price higher and higher.

Paying down debt doesn't seem to be top of mind, not in this economy, at least.