Consumer Debt Falls for the Seventh Straight Month
Consumers continue to cut debt in the face of this seemingly endless recession. The Federal Reserve Board reported that August represented the 7th consecutive month that consumers have reduced their borrowing.
Consumer debt encompasses credit cards, car loans and personal loans. It does not include mortgages or money owed for real estate.
It is obvious that consumers have been hit quite hard by the recession and the aggressive tactics of the credit card companies have also hit home in a big way.
Millions of credit card holders have seen their interest rates raised along with fees and reduced credit limits. Millions of account holders have also had their accounts closed by their respective credit card issuers.
Because of this a great many of them have decided to say to hell with their credit cards.
This comes in front of the 2009 shopping season. It is expected that retail sales will fall by 1% or more this shopping season. In addition, consumers will be turning more and more to cash and debit cards to pay for their purchases.
The Federal Reserve Board stated that the total outstanding consumer debt fell at a 5.8% annual rate which equates to $12 billion. For the month of July the numbers were revised to a 9.1% decline in debt which totals $19 billion.
Now that sounds like a lot of money and it most certainly is but once you put it into perspective you’ll see that consumer debt in the United States is still a monster.
To wit, the total amount of consumer debt outstanding is now pegged at $2.46 trillion. That actually figures in as a 4.6% drop from its peak. $1 trillion is 1000 billion dollars. I would put that into perspective if I could but I really can’t. See, I told it was a monster.
Related Information:
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