Consumer debt falls in March, led by credit card balances
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Consumer debt shrank in March for a second straight month, as more Americans either cut back willingly or had their bankers do it for them, new data show.
Although that ‘deleveraging’ will be healthy for many consumers in the long run, it’s a continuing drag on economic growth in the short run.
From Bloomberg News:
Consumer credit fell by $11.1 billion in March, almost three times more than forecast and the most since records began in 1943, to a total of $2.55 trillion, according to a Federal Reserve report released today. The 5.2% drop at an annual rate was the biggest since 1990, the Fed said. Credit also decreased by $8.1 billion in February, more than previously estimated.
Outstanding revolving debt, such as credit cards, fell at a 6.8% annual rate in March, a slower pace than the 12.1% drop in February. Still, revolving debt now has contracted for two straight quarters.
Non-revolving debt, such as auto loans, grew at a slight 0.9% rate in the first quarter, but fell 4.2% in March after expanding 1.2% in February. The fall-off in March suggests a broader cutback in consumer credit.
The Fed’s latest survey of banks showed that the majority continued to tighten lending standards for credit cards in particular in recent months, making it harder to get cards or cutting back on customers’ existing credit lines.
-- Tom Petruno