Consumer credit decreased at an annual rate of 3-1/2 percent in February 2009. Revolving credit decreased at an annual rate of 9-3/4 percent, and nonrevolving credit increased at an annual rate of 1/4 percent.
So -- consumers are cutting back on credit card debt. This is not a bad thing in the long run. However, this number could be revised lower or higher by a big margin:
Credit in January grew $8.1 billion, revised way up from a previously estimated $1.8 billion rise. And borrowing in December dropped $5.6 billion instead of $7.5 billion.
The February credit drop of $7.5 billion was bigger than what Wall Street expected, which was a $1 billion decline. It was the fourth decline in six months.
The Wall Street crisis and recession have made it harder for consumers, and businesses, to borrow money. The Fed last month rolled out details of a Term Asset-Backed Securities Loan Facility to loosen credit and relieve the economy.
Here's a chart of the change:
Note -- and here's a big point -- this does not include mortgage debt.
2 comments:
This doesn't reflect an active choice by consumers, but rather, credit card companies cutting credit lines. There has been a raft of credit card companies changing their rates and such, either forcing people to accept new, less accommodating terms, or simply cancel their accounts.
The real question in your posts here will be how long it will take to work the massive amount of debt and bad assets out of the system. I hear the savings rate is going up which is both good and bad. That should help get money back in the banks yet it comes with a pull back in spending.
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