If there’s one bright side to the current economic situation, it’s that we seem to have finally stopped borrowing so much money. Bloomberg is reporting that consumer borrowing dropped by nearly $8 billion last November, the second month in a row and “the first back-to-back monthly decline since 1992.”
“Consumers have clammed up,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, who forecast a decline. “The reduction in consumer credit doesn’t stop here, and will spill over into 2009. Households are bolstering their balance sheets.”
Here are some more figures from the article:
- “Consumer borrowing fell at a 3.7 percent annual rate in November, the biggest percentage decline since January 1998, the Fed said today. The decline in dollar terms was the biggest since records began in 1943.”
- “Revolving debt such as credit cards decreased by $2.8 billion.”
- “Non-revolving debt, including auto loans, dropped $5.2 billion for the month.”
We guess the big question is, will this stick? Or is it simply that consumers can’t borrow right now, either because there’s no one giving loans or because they’re in default on existing loans? It’s a lot easier to be a teetotaler when the bar is closed.
“Consumer Borrowing in U.S. Falls Record $7.9 Billion “ [Bloomberg]