Mid-Week last week, a NY Federal Reserve Research tweet lead to the following report….
Q 2 2020 Consumer Debt DECREASE?
Not believing the headline…. How could there have been a DECREASE ?
A deeper dive into the report was due!
In prior writings/research this report has been a staple of a resource so familiarity in the set up made the review easier…
In fact, Q 2 2020 shows a decrease in total consumer debt!
Notice the rise up to the great slowdown of 2007-2009 and then a pull in the wings for about five years, until early 2014?
Did it take five years to regain confidence?
Certainly, this could be just a blip, as one quarter does not a trend make.
If it does continue down, as it did during the post 09 peak, we should be able to infer there is a great belt tightening ability across the board for the consumer….
The following chart, also from the same report shows a drop in delinquency status, predominantly in the 120 day range … this may be a result of some of the forbearance ability due to the stimulus packages, but logically that should hit the shorter term, in our opinion.
Lastly, digging even deeper, the drop by loan type is showing the most movement in the shorter term and most evil credit card balance, followed by the less evil Auto Loan….
Could we really be turning Lemons into Lemonade ?
Have a Great “Puzzling but Hopeful Consumer Debt” day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth