This chart has been making the rounds in the blogosphere via
Business Insider.
U.S. households paid down their debts in February for the 15th time in the past 17 months, the Federal Reserve reported Wednesday. Outstanding consumer credit dropped by $11.5 billion, or a 5.6% annual rate, to $2.45 trillion in February following an upwardly revised $10.6 billion increase in January. Debts had declined for 12 straight months before January's increase and are down 5.2% from the peak in July 2008. In February, revolving credit, such as credit cards, declined by $9.4 billion, or a 13.1% annual pace, to $858.1 billion. Non-revolving credit, such as auto loans, student loans and personal loans, fell by $2.1 billion, or a 1.6% annual rate, to $1.59 trillion in February. (MarketWatch)
As is clear to most observers, deleveraging is good for the long-term health of the US consumer yet horrible for a Fed using every tool in its arsenal to fight deflationary pressures. I hate to read too much into any particular monthly data point but this one is particularly depressing. It now looks like the encouraging jump in January may have been more of an outlier. With revolving credit declining at a 13% pace we've got a long way to go to turn this ship around.
