Household debt continued declining last quarter from record highs in 2008, according to a new NY Fed report. That’s the good news, even if it means consumer spending is dead:
Aggregate consumer debt continued to decline in the second quarter, continuing its trend of the previous six quarters. As of June 30, 2010, total consumer indebtedness was $11.7 trillion, a reduction of $812 billion (6.5%) from its peak level at the close of 2008Q3, and $178 billion (1.5%) below its March 31, 2010 level.
Now here’s the bad news. New bankruptcies and foreclosures are on the rise, as those hopeless delinquents reach the end of the line:
About 496,000 individuals had a foreclosure notation added to their credit reports between March 31 and June 30, an 8.7% increase from the 2010Q1 level of new foreclosures. New bankruptcies noted on credit reports rose over 34% during the quarter, from 463,000 to 621,000. While we usually see jumps in the bankruptcy rate between the first and second quarter of each year, the current increase is higher than in the past few years, when it was around 20%.
Around four states are still posting crisis rates of delinquency. These are former bubble hot zones: California, Arizona, Florida, and especially Nevada.
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