Fed Says U.S. Household Debt Declined to 2006 Level

[Purveyor]

By Joshua Zumbrun - May 14, 2013
U.S. households reduced debt during the first quarter by 1 percent to the lowest level since 2006, resuming a deleveraging trend in the wake of the financial crisis, according to the Federal Reserve Bank of New York.

Household debt fell to $11.2 trillion in the first quarter compared with a peak burden of $12.7 trillion in the third quarter of 2008. Consumers reduced debt by $110 billion after increasing their borrowing by $31 billion in the fourth quarter of 2012, while delinquency rates fell “across the board,” the Fed district bank said in a statement.

“Household deleveraging has resumed its previous trajectory,” Wilbert van der Klaauw, a senior vice president and economist at the New York Fed, said today in a statement. “We’ll look to see if this pace of debt reduction and delinquency improvements will persist.”

Consumers are repairing their post-crisis balance sheets as the Fed tries to spur the expansion and enliven the job market by holding the main interest rate at zero and buying $85 billion in bonds every month. More than four years of record stimulus have yet to reignite household borrowing, and the unemployment rate has exceeded 7 percent since December 2008.

more...

http://www.bloomberg.com/news/print/2013-05-14/fed-says-u-s-household-debt-declined-to-2006-level.html

[aikoaiko]

1. I'm one of those folks who paid it down substantially.

I took on extra work duties for the last three years and paid down about 30K of medical bills/ran-out-of-money put on credit cards and bought a used car for cash instead of a new car on credit.

I was fortunate to receive this opportunity to work, but the 12 hours days are rough and I miss my kid.

[Purplehazed]

2. Does it really surprise the Fed......

that record low interest rates will not significantly increase household borrowing when median income has fallen dramatically? http://www.mybudget360.com/us-household-income-2013-median-household-income-declines-since-recession/

Also chilling, from the original article "Student lending has surpassed credit cards, auto loans and home equity loans in recent years and is now the largest form of consumer debt after mortgages." That represents money going straight to the banks and it's large investors. Money that will not be spent in the day to day economy.