From the FRBNY’s Q4 report on household debt and credit:
We recently commented at length about the declining savings rate and the consumer-spending-led rebound that was taking place, even as households continued to delever.
The key takeaway from this report is that all of the deleveraging in the fourth quarter took place in mortgage debt and Heloc balances. Outside of housing-related items, it was the first quarter in two years that total consumer debt did not fall.
The report also notes that the pace of new foreclosures slowed in the quarter, and the number of new bankruptcies on credit reports also fell.
Here’s a quick summary from a speech this morning by NY Fed president William Dudley:
The Household Debt and Credit Report released today indicates that there has been a pick-up in credit flows. Households increased their non-mortgage debt last quarter, a development not seen since the fourth quarter of 2008. The number of credit card applications increased—an indication of a pick-up in consumer demand for credit. And, the number of open credit card accounts also increased slightly—as more accounts were opened than were closed. Of course, signs of distress continued: households are still reducing their housing-related debt and delinquencies continue to be a problem. So, the adjustments remain far from complete.
It is encouraging that credit flows are no longer contracting because households’ renewed demand for credit has no doubt supported some of the recent rise in consumer spending.
Related link:
Household deleveraging and consumer-led growth – FT Alphaville