The US consumer continues to shed and incrementally use less debt. May Consumer Credit outstanding fell by $9.1b, almost $7b more than expected and April was revised to a decline of $14.9b from the initial report of a rise of $1b. The decline was led by a $7.3b fall in revolving credit outstanding while non revolving credit fell by $1.8b. The sharp downward revision to the April figure was led by a drop in the non revolving category. Overall consumer credit outstanding now stands at $2.415T, the lowest since March ’07 and has fallen for 18 of the last 20 months. A combination of debt paydown, more savings and reduced credit access has the consumer doing the tough but rational thing of deleveraging. The resulting higher savings rate, while a crimp to consumer spending, is the seed of investment and is the long term offset to the short term economic impact to 70% of the US economy.
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