by Hans Eisenbeis
- Declines in consumer debt during the Great Recession (and ersatz recovery) have been accelerated by foreclosures because a mortgage is a big piece of debt that no longer burdens an evicted homeowner. But a November 2010 report by the Fed shows that unsecured, revolving credit debt — that is, primarily credit card debt — continues to decline as well (CalculatedRiskBlog.com, 8 November 2010).
- According to the Fed, the third quarter of 2010 saw the first decrease in non-mortgage debt since 2000.
- Analysts say that this is likely the result of both a tightening of credit supply and demand, and American consumers’ aggressive new strategy to pay off outstanding debt.
WHAT THIS MEANS TO BUSINESS
- Still looking for evidence of the New Normal? American consumers have been scared straight, and they’ll continue to Get RealSM about financial responsibility. This will be great for the long-term health of the economy.
- Federal Reserve Bank of New York issued the report on household debt.