The Federal Reserve Bank of New York released their quarterly evaluation of the credit markets, and they are reporting some good news for consumers. Total consumer debt dropped $50 billion since last quarter, ending at $11.4 trillion on June 30. Mortgage balances and home equity credit balances declined, contributing to the overall decrease. Debt not related to real estate stands at $2.28 trillion, 9.5 percent below the peak in 2008.
Consumers are still reducing their debt as they have been since the start of the recession and credit crunch, but this process has slowed down a little. The volume of credit card accounts has increased, and so has the number of credit inquiries. For those who have credit cards, the issuers have increased available credit limits. These are signs that consumers are seeking more credit now and issuers are somewhat willing to comply.
Delinquencies have decreased this quarter. 90 percent of outstanding loans are current, the highest level since 2008.
With some signs that the credit market is thawing, a broader economic improvement might be around the corner. With access to credit, a willingness to use that credit, and a general impression among the public that the future will be brighter, the economy could improve. The biggest effect that might have is the willingness among businesses to hire more employees, increased salaries, and perhaps even a recovery in the real estate market.
Federal Reserve Bank of New York
Published or updated August 16, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @flexo on Twitter and visit our Facebook page for more updates.
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Luke Landes founded Consumerism Commentary in 2003 and has been building online communities since 1990. Luke, also known as Flexo, has contributed to PC World Magazine, US News, Forbes, and other publications. 
{ 7 comments… read them below or add one }
I think it is getting better but it will not be a quick recovery. It takes time to dig out of a deep hole.
any improvement to the economy will be small and slow but it’s a good thing that americans are reducing their credit card & mortgage balances.
The economy will improve when business starts expanding/hiring employees. Whether they borrow or use cash, business expansion is the important factor.
Businesses will start hiring when there is a bigger demand for its products or services.
Businesses will starte hiring when the employees that have stepped up and done two jobs can no longer handle those jobs due to the increase in sales. That is the only time they will do so. They have seen that they can make Joe do two jobs and pay only one salary. I think it will be slow and we just have to wait. I also think that some people will remember this time and be cautious about credit. At least, some of the people I have talked to have made that remark.
I think the return will be slow. Too many people seem to expect a slower return so it will be just as they collectively think. Since they expect slow recovery they will act in accordance – leaving others to see/know/think the recovery is slow.
My question is bit off grid. Why do we have to ‘measure’ everything? The information coming from these measurements is depressing. Perhaps the information makes things worse- in that it frightens people into a financial corner.