Updated numbers on consumer debt were just released. N.C. State University economist Mike Walden takes a look at the numbers and what they mean for the economy.
“Well overall for the last month that we have data for … consumer debt fell. It had been rising in previous months, so this was somewhat of a change. We saw, for example, credit card debt take a big drop. Debt for buying cars was essentially unchanged.
“The one type of debt that continued to rise and, in fact, has been the biggest rising type of debt for a number of months has been student loans.
“Many, of course, economists always try to parse these month-to-month data and try to glean implications. I think one reason why consumers pulled back a little bit on debt in the last month was, of course, the economy became a little gloomier.
“And if you as a household are less confident about the future economy, usually, not for everyone, but usually that works in the way of having people not take out as much debt. We really do need to have people look at their personal financial situation, of course, regarding debt. Households have made big strides in reducing their burdens of debt over the last three to four years. Many economists now think that households are at a sustainable level of debt and can begin taking on more debt in the future. If they do, that will help propel the economy.”