Consumer Debt Drops to 2004 and Earlier Levels

Federal Reserve numbers released on September 8, 2011 show that the amount of revolving consumer debt outstanding dropped in the last reported period, July.

Revolving debt fell to $792.5 billion which is the lowest level since August 2004.

This data represents a lower per capita indebtedness since the U.S. population has grown from 292 billion in 2004 to about 311 billion this year and a lower household debt levels since households have grown from 122 million in 2004 to about 130 million in 2011.

If we look at households only the amount of revolving debt per household would be:

2004 – $6,459
2011 – $6,092

To make the number even more obvious, if we adjust 2004 debt levels for inflation the 2011 equivalent would be $7,400. So essentially the drop in consume debt per household has been, in adjusted dollars, from $7,400 to $6,459.

The reason this is a continued issue is that debt relief providers are attempting to survive with debt help at a time that the amount of debt consumers are burdening is dropping.

The bottom line is that with dropping debt levels the number of debt relief providers will need to shrink in order for the stronger companies to survive. There does not appear to be sufficient demand for all the current providers.

So if we calculated it all out, the reduction in consumer debt would actually be below 2004 levels when you include the adjustment for inflation.


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6 thoughts on “Consumer Debt Drops to 2004 and Earlier Levels”

  1. Top story today on yahoo finance from CNN/Money. I saw this a few days ago in US News and World Report….Consumers are racking up credit card debt like it’s 2008.

    Americans added $18.4 billion to their debt load in the second quarter, a 66% increase from the debt they accumulated in the same quarter last year and 368% more than they tacked on in 2009, according to credit card research firm

    • I’ll leave it up to you to believe whichever source you want. Federal Reserve 2011Q2 shows 1.6B increase in revolving balance with a -$5.2B decrease in revolving balance in July, which lies outside Q2.

      July non-revolving was up 11.2.

      In fact the article you referenced even says “Despite the recent spending spree, the total amount of credit card debt consumers have accumulated is still significantly lower than in previous years.” That seems to correlate to what my article was about.

      • I tend to lean more toward independent sources today 🙂 over the federal government. We can all point to items/issues/comments posted by state and federal policy makers that simple are/were not true. Look at the last few years as an example, up until just a few days ago they would have you believing the economy was in full swing recovery….not!
        They want the world to feel good about the financial system (let alone the mom’s & pop’s in the good old USA) and have no fear doing whatever it takes to accomplish the task. After all, who do they really answer to, aside from the folks that put them up to it?
        Do I need to go on?

        • Noted.

          So you are in agreement with the statement in the article you referenced, “Despite the recent spending spree, the total amount of credit card debt consumers have accumulated is still significantly lower than in previous years.”

          • That goes without saying, as folks no longer have the ability to leverage home equity as a bailout, however, I think the point of the article “the accelerated use of plastic Q-2” is valid and very much real.

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