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Credit Card Delinquencies Fall 4th Straight Month and Credit Card Debt Falls to 45-Mo. Low in March. Chart:

http://2.bp.blogspot.com/_otfwl2zc6Qc/S_GQvMNCzwI/AAAAAAAANdc/fayiRf3nfzo/s1600/credit.jpg

PeakTrader said...

No credit, no delinquencies.

Anonymous said...

"The credit-worthy customers are paying down debt which makes the statistic look better."

PeakTrader said...

How do you know that? It's possible the decline in credit and delinquencies are from credit cards being canceled, lower credit limits, and new applicants being rejected exceeding credit worthy card holders building-up debt.

Anonymous said...

The money quote: The upshot of all this is that the record decline in commercial bank loans/leases that the U.S. experienced in 2009 was dominated by pay-downs of loans rather than write-offs. Pay-downs have negative implications for new aggregate demand whereas write-downs are irrelevant (at least directly) with regard to new aggregate demand.

PeakTrader said...

Anon, that data aren't relevant to credit card debt. Here are some relevant data:

Credit Card Debt Statistics
Hoffman Brinker & Roberts
(updated November 2009)

"Eighty-eight million accounts and credit lines, representing $751 billion in credit, have been closed since September of 2008.

In September 2008 credit card debt hit an all-time high of $975 billion. Banks shed nearly $76 billion in card account balances over the 11 months preceding August 2009. The Fed said the total outstanding credit card debt at the end of August 2009 was $899 billion.

Charge-off rates in January 2009 were 40% higher than a year ago at 7.5% and were expected to approach 9% during the second half of 2009."

Charge-off rate:

"The charge-off rate is the amount of charge-offs divided by the average outstanding credit card balances owed to the issuer. Charge-off is actually an accounting term that means a company has decided it has no chance to collect a debt and charges it off its books. A rising charge-off rate is a sign of an economy under stress."

Fed report: Consumer credit card balances keep plummeting

"At the end of 2008, Americans held $957.3 billion in credit card debt. At the end of 2009, that number fell to $866 billion -- a total decrease in debt of more than $91 billion."

Does this make sense?:

Scott Grannis
May 14, 2010

M2 growth over the past 6-9 months has been extremely low. Lower than at almost any time in the past 50 years. Economy bears point to this as evidence that the economy is on thin ice, because the Fed hasn't done enough to counteract the deflationary pressures that are being created by all the "slack" in the economy. Economy bulls like me see things very differently. I note that M2 growth surged in late 2008, mainly because the public's demand for money (M2 being a better measure of money demand than of money supply, in my view) surged. That was when everyone wanted to hoard money, and as a consequence spending ground to a halt all over the world. That money is now being released, and it is showing up as increased spending (see the retail sales post earlier today). Money demand here in the U.S. is declining, and M2 velocity is rising, and that goes hand in hand with the return of confidence and the improving fundamentals of the U.S. economy. So as I see it, the slowdown in M2 growth is a very good sign that the economy is coming back to life.