The Federal Reserve released February’s Consumer Credit Outstanding report today (g.19), which shows that while we’re making some progress with the whole consumer deleveraging thing, that progress is not exactly coming quickly (non-seasonally-adjusted):
Total consumer credit outstanding has gone down for the past 2 months and in 19 of the last 26 months since it peaked in 12/2008, for a total reduction of 6.8% from the peak. As the chart shows, the magnitude in increases since 2007/2008 are less than they were previously, and the magnitude of decreases are vastly larger. This is a good thing, but if we really want to get into it, we have to ask, would it be better if we spent more money paying off our debt than keeping up consumer spending? This is a much more complicated analysis for another time, but it’s a question I seldom see asked, let alone answered. Maybe I’ll get to it later this week/weekend…
Additionally, we can’t ignore the substantial increases in consumer credit outstanding over the past 25, 20, and 15 years has outpaced gains in GDP, although GDP has grown faster than credit over the past 5 and 10 year periods.
This data is presented with the caveat that if you dig around a little deeper, the results look a little different, as The Pragmatic Capitalist has detailed here and most recently today, here. If you’re really interested in seeing the big picture, I suggest checking out TPC’s posts.