Consumer Credit continues to contract
The US consumer continues to shed and incrementally use less debt. May Consumer Credit outstanding fell by $9.1b, almost $7b more than expected and April was revised to a decline of $14.9b from the initial report of a rise of $1b. The decline was led by a $7.3b fall in revolving credit outstanding while non revolving credit fell by $1.8b. The sharp downward revision to the April figure was led by a drop in the non revolving category. Overall consumer credit outstanding now stands at $2.415T, the lowest since March ’07 and has fallen for 18 of the last 20 months. A combination of debt paydown, more savings and reduced credit access has the consumer doing the tough but rational thing of deleveraging. The resulting higher savings rate, while a crimp to consumer spending, is the seed of investment and is the long term offset to the short term economic impact to 70% of the US economy.
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July 8th, 2010 at 8:55 pm
People feel so screwed over by the banks that they are either walking away from their mortgages; settling their credit card debt or actually paying it off in sheer disgust…who are the banks going to be doing business with in the future and how are they actually going to be making money? We are back to the robber baron era where banks were really only willing to lend money to the few that can qualify, but really don’t need it.
We have bailed out the banks and they are just contently sitting on the money….they couldn’t give a shit what happens at this point is my guess…
July 9th, 2010 at 1:23 am
It’s good to see people continue to fire the banks. We may suffer for it economically for a time but long term this will be good. Continue to hunker down folks. This is not over yet
July 9th, 2010 at 8:53 am
[...] are continuing to use less credit and cut down thier debt. May figures show consumers’ outstanding debt fell by $9.1 billion — about $7 billion more than [...]