US Households reducing their consumer debt

[we vs us]

While it's a bit of a duh moment, the great rebalancing continues: 

"The Federal Reserve Bank of New York today announced the release of a new Quarterly Report on Household Debt and Credit and an accompanying web page. The report shows that households steadily reduced aggregate consumer indebtedness over the past seven quarters. In the second quarter of 2010, they owed 6.4 percent less than they did in 2008, the peak year for indebtedness.

Additionally, for the first time since early 2006, the share of total household debt in some stage of delinquency declined, from 11.9 percent to 11.2 percent. However, the number of people with a new bankruptcy noted on their credit reports rose 34 percent during the second quarter, considerably higher than the 20 percent increase typical of the second quarter in recent years."

Granted, 10% unemployment and mass mortgage defaults will account for some of this (note the increased bankruptcy rate), I'd say it's also true that people are cutting back, saving more, and paying down debt even if they're not in dire straits.

And how bout that debt bubble!  Take a look at your chart of the day!

[nathanm]

Interestingly, up in Canada where they didn't have a complete meltdown consumer debt is still going up.