Consumer Credit Declines

Consumer credit is declining. The American consumer is able to buy less and less on credit with every passing month.

During the month of July consumer credit dropped by about 3 billion dollars. As of August the collective American consumer was able to buy 2.4 trillion dollars worth of merchandise via credit if we were to all max out every account we had.


2.4 trillion is the lowest levels of consumer credit sense 2007.

More specifically revolving credit accounts which are dominated by credit card accounts fell by 5 billion dollars down to a total of 822 billion dollars in credit.

You may notice that those numbers do not exactly make sense. The 5 billion lost on credit card accounts was off set by a rise in auto loans and non revolving credit. Non-revolving credit rose by almost 2 billion dollars. to about 1.6 trillion.

oddly enough mortgage rates are at all time lows with the average 30 year fixed rate home loan at a microscopic 4.27%.

I think the declining consumer credit is a good thing, or at least a necessary thing. The US consumer has been overspending for years. We now are able to see what effect easy money ultimately has on the economy. I think we have all learned the finance lesson for the decade.