U.S. consumer credit debt falls for eighth straight month in September
Filed under: Economy
U.S. consumers' efforts to pay down their credit card debts continue. Outstanding U.S. consumer credit fell by $14.8 billion or at a 7.2 percent annual rate in September -- the eighth straight monthly credit decline, the U.S. Federal Reserve announced Friday. Economists surveyed by Bloomberg News had expected to see a September consumer credit contraction of $10 billion, after a revised $9.9 billion decline in August, and a $19 billion plunge in July. Consumer credit is down 4.7 percent compared to a year ago, and balances have fallen in 12 of the past 14 months.
In September, total outstanding consumer credit, including revolving and non-revolving credit, declined to $2.46 trillion, or by 4.7 percent compared to a year ago, the Fed said. In Q3, total outstanding debt declined at a 6.1 percent annual rate; it fell at 6.6 percent and 3.7 percent annual rates in Q2 and Q1, respectively.
In September, revolving debt, which includes most credit cards, fell at a 13.3 percent annual rate or by $9.9 billion to $889 billion. Non-revolving debt, which includes auto loans and personal loans, fell at a 3.7 percent annual rate or by $4.9 billion to $1.57 trillion.
A perfect storm of factors during the 2007-2009 recession has coalesced, resulting in steadily declining consumer credit balances. Stagnant incomes in many job segments, the loss of more than 7.6 million jobs from the workforce, and the effects of reduced credit lines and higher interests rates from banks and card issuers have prompted Americans to reduce their credit balances over the past year.
Most economists view the declining balances as a positive development, long-term, as Americans over-consumed this decade, resulting in high and in many cases unsustainable credit card balances. Short-term, however, "the great credit card pay-down" will lower U.S. GDP growth, as it will constrain consumer spending, which accounts for the bulk of U.S. GDP.
Economic Analysis
As the September consumer credit data indicated, Americans remain in belt-tightening mode, and paying down credit credit balances is a part of that cautious stance. The next major unresolved question concerns whether consumer spending, which historically accounts for 60 to 65 percent of U.S. GDP, will occupy as large a space in the U.S. economy in the future. If the current "frugal consumer" trend endures, it's highly likely that consumption as a percent of GDP will decrease.
Further, some economic schools argue that lower consumption levels imply a lower structural GDP growth rate for the United States -- arguing that a high rate of consumer spending is required to achieve a high GDP growth. Still, the frugal consumer era is young. Let's await another quarter of consumer credit data before declaring an end to the traditional consumption-based U.S. economy and the days of robust GDP growth.
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Reader Comments (Page 1 of 1)
11-06-2009 @ 5:44PM
DebterNation said...
Don't use your credit card and stop the transfer of wealth from Main Street to Wall Street. They are borrowing money at zero interest rates from the fed and loaning it to you at 30%. People who can will pay off their balances and people who can't will fill for bankrupcy.
Don't you love it "What goes around comes around' !
Reply
11-09-2009 @ 6:36PM
Dereck Dodson said...
The "REAL TRUTH"
The World Fortune has "Appropriated", "Garnished", and "Consumed" the entire Finance Industry Worldwide in a Maryland District Court Case with the FDIC regulation "No failing Bank can Merge with another failing Bank".
There are no Civilian "Taxpayer Dollars" involving "Base Financing" in any World Fortune Government Owned Corporations or Businesses. There are only "World Fortune Owner Tax Dollars". The World Fortunes Government Owned Corporations and Businesses pay Taxes to the 99th Percentile Worldwide. Don't be mislead by the Media's articulation and terminology. "Tax Diversion Operations" are the only reason the World Economy is breathing any life right now. The Government will "shrink and dissolve" until Private World Fortune Corporations organized with Colleges and Universities run all Federal, State, County, and City Operations effectively killing dirty politicians "Red Tape".
Every Investment Bank (including CIT), Bank, Credit, Loan, and Finance Company lost the ability to use my money, therefore all Monetary Collection Accounts have been "Levied" are being routed to my Garnishment Payments.
All the lies being told by Media Reporters and Columnists are the total cause of all the "holdup". Government Regulatory Agencies are at fault for not utilizing the "Truth in Media Act" that Congress spent all that time passing.
The World Fortune is moving to completely end "World Poverty" and the "ponzi schemers" are attempting to "bribe and blackmail" their way into a blockade of this with their criminal "political figureheads".
The Maryland District Court Case can be Tracked at:
www.Courts.State.MD./District under "Case Search"
Case Number.: 0502-0007498-2008
The Finance Industry was already "Privately Owned" by me and will pay out this Appropriation and Garnishment forever under this Court Ruling.
11-09-2009 @ 7:01PM
Dereck Dodson said...
The "REAL TRUTH" 2
The World Fortune has "Appropriated", "Garnished", and "Consumed" the entire Finance Industry Worldwide in a Maryland District Court Case with the FDIC regulation "No failing Bank can Merge with another failing Bank".
There are no Civilian "Taxpayer Dollars" involving "Base Financing" in any World Fortune Government Owned Corporations or Businesses. There are only "World Fortune Owner Tax Dollars". The World Fortunes Government Owned Corporations and Businesses pay Taxes to the 99th Percentile Worldwide. Don't be mislead by the Media's articulation and terminology. "Tax Diversion Operations" are the only reason the World Economy is breathing any life right now. The Government will "shrink and dissolve" until Private World Fortune Corporations organized with Colleges and Universities run all Federal, State, County, and City Operations effectively killing dirty politicians "Red Tape".
Every Investment Bank (including CIT and US Bank), Bank, Credit, Loan, and Finance Company lost the ability to use my money, therefore all Monetary Collection Accounts from all my World Fortunes Government-owned Corporations and Businesses have been "Levied" and are being routed to my Garnishment Payments.
All the lies being told by Media Reporters and Columnists are the total cause of all the "holdup". Government Regulatory Agencies are at fault for not utilizing the "Truth in Media Act" that Congress spent all that time passing.
The World Fortune is moving to completely end "World Poverty" and the "ponzi schemers" are attempting to "bribe and blackmail" their way into a blockade of this with their criminal "political figureheads".
The Maryland District Court Cases can be Tracked on the world wide web at:
Courts.State.MD./District under "Case Search"
Case Number.: 0502-0007498-2008
CACH LLC (Bank Of America) vs Dereck T. Dodson
0502-0035887-2007
Chase Bank USA, NA vs Dereck T. Dodson
0502-0002668-2009
Wharton Enterprises (Advanta Bank) vs Dereck T. Dodson
All cases are awarded "In favor of Defendant", "Dismissed with Prejudice", and Deleted.
The Finance Industry was already "Privately Owned" by me and will pay out this Appropriation and Garnishment forever under this Court Ruling.
11-07-2009 @ 7:15AM
fakeconomics100 said...
Great Job Consumers----Just save and don't borrow. Tell them to take their FICO score and shove it
Reply
11-07-2009 @ 7:18AM
fakeconomics100 said...
DebterNation said...Don't use your credit card and stop the transfer of wealth from Main Street to Wall Street. They are borrowing money at zero interest rates from the fed and loaning it to you at 30%. People who can will pay off their balances and people who can't will fill for bankrupcy.
Don't you love it "What goes around comes around' !
-------------------------------Great Post---I like it--We shall not become hostages of Greedy Banks, Greedy Insurance and Greedy Oil
Reply
11-08-2009 @ 3:49AM
Alessandro Machi said...
This is exactly what is going on. The only kind of new business wall street can come up with involves outsourcing jobs or creating computer jobs that pay 100,000 a year or more, that's it!
Wall Street absolutely hates companies that makes hardware instead of software. Sorry guys, we can't all be in the software business.
It's gotten so bad that APPLE releases Snow Leopard and immediately paralyzes everybody who owns a canon camera from using the canon software that comes with it, making the camera useless UNTIL the day comes when canon "catches up". Does Apple's stock suffer? No, it goes up.
You can literally walk into a COSTCO right now and buy a canon camera that WILL NOT work with Snow Leopard, yet the arrogance of wall street is that somehow this is no big thing.
These two types of jobs, outsourcing, and software, DO NOT help Main Street recover. It is up to main street to keep their money locally and put that money through as many local hands as possible BEFORE it inevitably goes back to the banks to pay down consumer debt.
Barack Obama knows this, and yet still does nothing because he knows it is Wall Street money that will get him re-elected in 2012. And trust me, I can't stand the republicans either.
I was and continue to be for Hillary Clinton.
11-07-2009 @ 7:23AM
fakeconomics100 said...
-------------------------------Great Post---I like it--We shall not become hostages of Greedy Banks, Greedy Insurance and Greedy Oil
Reply
11-07-2009 @ 7:31AM
RJ said...
I personally will never use any credit card or have any financial dealings with JP Morgan Chase. What a bunch of rip off artists. I have a Sony Visa card which is owned by Chase and will not buy any Sony products because they are affiliated with thses crooks.
Reply
11-07-2009 @ 8:11AM
fakeconomics100 said...
RJ,
I am also in the same mood. I don't use credit card anymore. I cancelled all of them last year. All they (credit card companies) do is--sell my personal information and address. I have just one credit card and that is from a credit union and I like it because of their service
11-07-2009 @ 8:16AM
fakeconomics100 said...
This is a war between CONSUMERS and Greedy Banks, Greedy Insurance and Greedy Oil----------I ask all consumers--please stay committed to savings, conservation and self reliancy
Reply
11-07-2009 @ 8:16AM
Cathy said...
finally! people are realizing that the government rewarding us to get into debt is NOT the way to live your life. Now we have to demand that Congress get the country out of debt...because they are charging everything and more in Washington and sending the bill to us and we are not saying NO. we have to say NO to deficit spending, printing and diluting our dollars, and incomprehensible debt!
Reply
11-07-2009 @ 8:40AM
mdresch said...
A fall in consumer debt as the story relates, is actually good news for the US as most economists state. Savings make us wealthier as a society, and maybe we can use this wealth to fix some of our problems like dying younger than the rest of developed nations with a higher infant mortality. The stock market is rising because of some very positive signs the economy is coming back from the Republican abyss, a higher savings rate is one of the reasons.
Reply
11-07-2009 @ 11:10AM
Classic Liberal said...
"developed nations with a higher infant mortality?"
That is because the US health care system actaually tries to save very premature babies while the socialized medicine in other countries does not have the means.
The "facts" aren't always what you think. Make sure you actaully know what they mean before you repeat them.
In the 1980s the 49ers' numbers against the pass were horrible comapred to other teams. They must have been horrible.
11-07-2009 @ 9:38AM
MADDAT52 said...
Bankruptcies have a funny way of slowing down credit and the banks sitting on a trillion that they won't let out the door adds to the situation. If you think these numbers are a good sign you don't get it.
Reply
11-07-2009 @ 9:42AM
MADDAT52 said...
All the credit card debt is getting written off in every quarter, you can't fool me with these false numbers.
Reply
11-07-2009 @ 8:32PM
Alessandro Machi said...
There definitely may be a ying and yang to what is going on. People are trying to pay down debt, and debt is being written off as well.
The ideal solution that Barack Obama will never advocate is super low interest rate to any credit card debtor that is paying down their debt.
I am shocked at how NOBODY who calls themselves a financial expert will even hint at what a great idea this is.
http://www.daily-protest.com
http://www.bloggersagainstchasebank.com
http://www.thecatwhoatechasebank.com
I'm not forgiving and I'm not forgetting. If you have been majorly screwed by Chase Bank, please let me know and I might be able to include your story in my upcoming book.
11-07-2009 @ 10:40AM
Sarah said...
Hooray for not going into debt. Economists want us to spend wildly on things (made in China) we don't need with money we don't have, but we have finally wised up! Cancel all your credit cards and use cash or a debit card. I carry a bank Visa debit card and my American Express card - I pay no interest, late fees, penalties, etc. Of course I learned this lesson the hard way, but NEVER AGAIN! If you don't have the money for something, don't buy it!
Reply
11-09-2009 @ 5:58AM
Tamara Holmes said...
First, it is important to know exactly how much debt have currently. You may have multiple cards. Compile all your bank statements. Then have to make a detailed list of credit card debt which includes the interest rates you are paying for each card. And get the total figure of debt.
http://shrinkcreditdebt.com/
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