Just call it that non-swiping sound. It seems that Americans are keeping their credit cards in their wallets, as the nation's worst recession in decades has prompted citizens to re-evaluate their spending habits.

Balances on U.S. consumer credit cards fell by $7.4 billion in February, the U.S. Federal Reserve announced Tuesday. This translates to a -9.7 percent annual rate, the largest rate of decline since 1976. Economists surveyed by Bloomberg News had expected February card card use to contract by $3 billion.

Credit increased a revised $8.1 billion or 3.8 percent in January. Over the past 12 months, credit has expanded by 1.1 percent – the slowest growth since 1992.

Frugal consumers

In February, total outstanding consumer credit, including revolving and non-revolving credit, declined by a 3.5% annual rate, or by $7.5 billion to a seasonally adjusted $2.56 trillion, the Fed said.

Revolving credit, which includes most credit cards, declined by $7.8 billion, or 9.7 percent annually, in February to $955.8 billion. Non-revolving credit, which included auto loans and personal loans, increased $313 million, or by 0.2 percent, to $1.6 trillion.

Economic Analysis: Without question, Americans are in belt-tightening mode, something you'd expect during a recession. Even so, this cycle's pronounced recession, with its to-date large job lay-offs, and accompanying financial crisis, has taken economizing to levels not seen in decades. The largest drop in credit since 1972, on an annualized basis, indicates that consumers are not only concerned about the U.S. economy's performance in the month's ahead, but also suggests a structural shift in the economy – one where consumers not only pay down revolving debt, but weed out frivolous consumption. Reduced credit card limits by banks have reinforced that trend.

The implications for GDP growth? Obviously, the U.S. recovery will not follow a typical pattern, at least until the economy adjusts to commerce based more on production, quality of life, and infrastructure concerns, and less on consumer goods.

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