De-leveraging process has made progress

Observation:  A story that will appear in tomorrow’s New York Times (available now at the NYTimes.com website) suggests that U.S. consumers and lenders have made tremendous progress in cutting debt.  A graphic illustrates just how far and fast credit liabilities and fallen, and the main story explains that while consumers deserve much of the credit for their self-imposed austerity, lenders, too, have speeded the process along with the amount debt that has been written off in the form of losses.  Click here to see the full story.

Implications:   During the recession of 12/2007 through 6/2009—or in the several months that followed—many pundits (and perhaps many families) wondered whether the U.S. economy could get out from under its considerable personal debt. 

It would appear that there is light at the end of that tunnel.  And that’s good, since the economy is fueled so heavily by consumer spending; spending that does not happen when consumers feel fear about their employment future or the pressure of outstanding debt.

Mike Anderson, for the Elm Street Economics consumer trends blog. A service of The Center for Sales Strategy, Inc.