Consumers still paying off debt. A good thing for them but a bad thing for the economy

I came across a good chart and data provided by Haver Analytics on Consumer Debt. You will remember that I said in a recent post that the Consumer is 70% of the equation in Sales in this county and until they start really spending, the economy is going to stagnate. Add to that the fact that unemployment will also stay high as long as companies can increase productivity with their existing employees. In the chart above you can see that things don't appear to be trending in the right direction for the economy to pick up.

In the Haver Analytics posting today, here is what they said:

"Consumer borrowing continued its retrenchment during February. Consumer credit outstanding fell $11.5B, reversing a revised $10.6B January increase which was much larger than reported last month. The Federal Reserve reported late-Wednesday that the resultant 4.0% y/y decline in credit outstanding remained near the record. During the last ten years, there has been a 60% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures.

· Usage of revolving credit was cut sharply. The $9.5B drop followed a modest January increase and left usage down a near-record 9.1% y/y. Versus February 2009, finance companies lowered lending by 14.3%, commercial bank lending fell 12.7%, pools of securitized assets fell 7.4%. Loans from credit unions offset some of these declines with a 6.5% increase while savings institution raised lending 1.6%."