Consumer Credit changes for Mar 2009

The fed released data this week on outstanding consumer credit debt. The outstanding debt has been falling since the start of the credit crises in October of last year. In years pass falling consumer credit debt levels usual happen during the onset of a recession. The more severe recessions actual consumer credit contracts on a year to year basis. I've put together a couple of graphs of Year over Year changes in consumer credit.

The fed started tracking consumer credit debt in 1943. As you can see it has had a very steady and upward trend. You can see a larger version of the graphs by clicking on the images. The small wavers in the lines are changes in the growth rate of consumer debt. Since changes in total outstanding debt can either rise or fall on a month to month basis. I've smoothed out the trend by making a year to year comparison of debt levels.

Growth of total consumer debt varies from year to year. As you can see by this graph, debt growth averages between 5% and 15%. It is on only rare occurrences that actual outstanding credit contracts on a year to comparison. These contractions usually happen during the more severe recessions.

This last graph is from 1990 to present to show in detail the changes since the last time consumer credit contracted. In 1990 the consumer credit growth rate started falling. 18 months later total credit had started to contract. Reaching a total contraction of 2%. In April 2008 the credit growth rate started falling, this was shortly after the Bear Stearns collapse. April 2009 should be the first time total debt contracts on a Year to Year basis since '91.

Looking back there have only been a few points in time where total consumer debt outstanding has contracted. In each of these cases, the recession were worse and longer felt. The fall in the growth rate has accelerated since the Lehman collapse in the the fall. To date, this is one of the quickest time frames where total consumer debt goes from peak growth rate to contraction.