Consumer Credit: Healing but Still in Bad Shape

On Friday, Econintersect reported that for the first time in two years – consumer credit expanded almost immeasurably (analysis here).  Now more detailed analysis provided by the NY Federal Reserve for 1Q2011 shows:

Per-capita consumer debt in the United States essentially held steady in the first quarter, ending a string of nine consecutive quarters of decline.

Graphically, you can see that student loans are the most rapidly growing sector of consumer credit since 2000.

Behind the leveling off of total consumer debt was a small increase in mortgage balances shown on consumer credit reports. In spite of the small increase, household mortgage indebtedness and home equity lines of credit (HELOCs) are now 8.1% and 9.9%, espectively, below their peaks. Consumer indebtedness excluding mortgage and HELOC balances fell slightly ($30 billion or about 1%) in the quarter. Consumers’ non-real estate indebtedness now stands at $2.29 trillion, 9.6% below its 2008Q4 peak.

Overall, from a delinquency point of view, the percentage of consumers current is improving.

Total household delinquency rates declined for the fifth consecutive quarter in 2011Q1. As of March 31, 10.5% of outstanding debt was in some stage of delinquency, compared to 10.8% on December 31, 2010 and 11.9% a year ago. About $1.2 trillion of consumer debt remains delinquent and $890 billion is seriously delinquent (at least 90 days late or “severely derogatory”). Compared to a year ago, both delinquent and seriously delinquent balances have fallen 15%.

About 368,000 individuals had a foreclosure notation added to their credit reports between December 31 and March 31, a 17.7% decrease from the 2010Q4 level of new foreclosures. New bankruptcies noted on credit reports fell 13.3% during the quarter, from 500,000 to 434,000. New bankruptcies in 2011Q1 were 6.4% below their levels of 2010Q1.

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