Consumer credit plunged far faster than expected in February, with Americans taking on far less credit card debt. Credit card debt fell at an annual rate of $7.8 billion, or 9.7 per cent. That is the sharpest drop in dollar terms ever (although the records only go back to 1968.) It’s the steepest percentage fall since 1978.
Overall Consumer debt decreased at an annual rate of 3-1/2 per cent. What the Fed’s call “Revolving Credit” (largely credit cards but also some home equity lines of credit) decreased at an annual rate of 9-3/4 per cent. So-called “nonrevolving credit” (think auto-loans and student loans) increased at an annual rate of 1/4 per cent. That’s a dramatic shift in both the level of debt Americans are taking on.
It’s also a pretty amazing show of defiance by the American consumer against plans by the economic poobahs to revive consumer borrowing.