Consumer Credit Levels WAY Down...

The graph at right (click to enlarge) shows the change in consumer credit levels over the past 60 years.  Basically you see a variable, but always increasing, amount of credit per consumer – until this recession, when (for the first time since this was measured) credit levels are actually falling.

At first blush you might think that this is because consumers are saving more and borrowing less, but unfortunately this is not the case.  In fact, the entire decline is due to consumers walking away from their debt, both mortgages and credit cards.  This recession is the first time consumers have ever done that.

There's a message in that statistic.  I'm not entirely sure what that message is, but I'm pretty darned sure it ain't good.  The bottom line is that an interesting percentage of consumers no longer believe that they have a personal obligation to repay debt that they've incurred – and that there are no personal consequences of import when they do.  Lenders will have trouble making a profit in such an environment, which means credit will get tighter, which means that major purchases like homes, cars, etc. will be down.  Not good...

Via TigerHawk (and other analysis at several other sites).