Monday, May 9, 2011
The New York Fed is out with the latest quarterly report on US household debt. The most important graph is this one showing the total balance of debt:
As you can see, the nominal value of outstanding debt increased in Q1 2011 for the first time since early in the great recession. However, I like to look at the debt divided by disposable personal income, and in those terms, the decline continued, albeit at a slower pace:
In other words, although debt increased in dollar terms, it didn't increase as fast as people's nominal income (which incorporates both inflation and real income increases).
Note that the red line above is a general indication of where the current direction of the trend is taking us, and is not a forecast. I don't know how fast or how long deleveraging will continue.
The other significant news seems to be that total credit card limits started to increase for the first time since the recession, at least in nominal terms:
The fraction of loans delinquent continued to decline, but is still at very high levels: