Several economic reports this week showed data that shows a change in the way Americans and U.S. businesses are handling their finance as debt has continued to fall and business inventories are leaner.
The US Federal Reserve released the July consumer credit report. Data showed a $21.6 billion drop in consumer debt as both revolving and non-revolving facilities shrunk by more than 8 per cent compared to a year ago. This is the largest decline since records began in 1943. The decline in consumer credit came as a surprise to most economists who predicted a $4 billion drop in July following a $15.5 billion decline in June. Though consumer debt has fallen the past few months, total U.S. consumer debt still stands at $2.6 trillion.
While the lower debt levels are good for families and businesses on an individual level, collectively it will ultimately mean lower short run economic activity.
(source: All Headline News)