Consumers Cut Up Their Credit Cards

Today the St. Louis Fed just released figures on total consumer revolving credit. This is basically consumer credit data but a month late. Total consumer credit fell just .7% but figures show that revolving consumer credit shrunk 6.5% on an annualized basis.

The decline went from $831 billion to $826 billion. The last time we had such a noticeable drop was around 1990 as you can see from the chart. Though consumers stop using their credit cards, this is actually bad for the economy at the moment, and retailing in particular. Consumer spending is needed to help reboot the economy, so until consumers regain confidence in the stability of their jobs, we’re not likely to see an economic rebound soon or the end of the recession.