The Fed is out with its latest report on consumer credit, and it’s filled with good news — kinda sorta. While the report says that, for the seventh consecutive quarter, consumers are borrowing less and paying off more of their debt, that doesn’t necessarily mean the economy is healthier. The numbers “can be a result of both tightening credit standards and voluntary changes in saving behavior,” said Fed economist Donghoon Lee. So, maybe you’re borrowing less because you don’t want to get stuck with more debt — or maybe it’s just because nobody wants to lend you money anymore.

Tod “Tightwad Tod” Marks of Consumer Reports looks at the glass and sees it as both half-full and half-empty. Well, maybe three-quarters empty:

It’s a positive sign any time consumers can decrease the burdensome weight of debt, Especially in light on the momentous problems of unemployment, still hovering at around 10 percent, higher property taxes many face, and flat or declining home values. The fact is Americans just don’t have as much to spend as they used to. Credit remains extremely tight. So this isn’t a huge surprise.

One form of debt that’s particularly hard to unload: credit-card balances. According to Consumer Reports, about 13.6 million Americans are still paying off their credit-card bills from last year’s holiday season.

Consumer debt keeps falling, but credit-card bills linger [Consumer Reports]
New York Fed Q3 Report on Household Debt and Credit Shows Continued Decline in Consumer Debt [Federal Reserve Bank of New York]

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