A report showing a reduction in housing-related debt and a rise in credit card and other types of consumer debt is a good sign for the economy, according to Jeff Collins and Tim Yeager of the City Wire.
The Federal Reserve Bank of New York's most recent quarterly report on household debt and credit showed that the total consumer debt dropped $126 billion to $11.53 trillion. In addition to that, the fourth quarter 2011 report showed that mortgage and home equity lines of credit balances dropped $146 billion, "a sign that consumers continue to reduce housing related debt," the Fed report said.
"While we continue to see improvements in the delinquent balances and delinquency transition rates this quarter, there has been a noticeable decrease in the rate of improvement compared to 2009-2010," Andrew Haugwout, vice president and economist at the New York Fed, said in a statement, according to the City Wire. "Overall, it appears that delinquency rates are stabilizing at levels that remain significantly higher than pre-crisis levels."
Other aspects of the report include:
- A total of $1.12 trillion of consumer debt or 9.8 percent of outstanding debt is delinquent, with approximately $824 billion being at least 90 days late;
- Non-real-estate debt went up $20 billion or 0.8 percent during the quarter, maintaining the trend of gains.
- Cumulative credit card limits increased by $98 billion (3.6 percent), resuming the trend of gains seen in the first half of the year.
- Inquiries for credit accounts within six months, a sign of consumer credit demand, went up 2.7 percent, a gain for the third consecutive quarter.