Consumer Credit – March 2009

The total consumer credit volume in the US has dropped to $2.53 trillion, a drop of $27.2 billion from February. It has now fallen from its December 08 peak by $64 billion:

total-consumer-credit-us-may-2009
Click on image to enlarge.

When looking at the chart above one might think that this might as well be just another ditch like the ones that usually followed December.

But one has to realize that the chart above starts at 2001. From 2001 through 2007 the American attitude was consistently biased toward more and more borrowing and more and more spending.

But these attitudes have changed. The end of consumerism is not just a temporary recessionary ditch. It is a fundamental shift in psychology and attitudes that can carry on for a very long time.

When looking at the long term chart of consumer credit, one gets a better picture of where we can go from here, assuming that this consumer cradit bubble that started in 1993 has burst:
total-consumer-credit-us-long-term
Click image to enlarge.

Simply put: I think the roller coaster has reached the top.


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