New stats from the 6 main credit card issuers show that the credit standing of our the average American is improving dramatically.
Bloomberg reports the credit card issuers collectively are showing the lowest level of defaults going back a good long time. The numbers for December 2010, which is the most recent month for which we have data, are significantly better than they were just a few months earlier at the start of 2010. Charge-off rates are down, as are the numbers of customers who are 30 days late. The whole picture is getting better.
We ended up in the Great Recession, with 8.5 million who want to work not being able to find jobs, because of our unbelievable levels of debt. At the peak of the debt bubble, the typical American household had debt of $1.35 for every dollar earned. That was not sustainable.
Sure enough, we’ve gone through what’s called “deleveraging,” which is a fancy way of saying we’re working the debt off. Corporate America crossed the finish line first and many companies are now sitting on massive stockpiles of cash.
But individuals are turning their finances around too. Person by person, we have resolved to change the way we handle money. Now, there always will be people who are contrarian, who still wants to party like it’s 1999 and stack debt on top of debt. But the overall picture is moving in the right direction.
The nice thing is that more manageable levels of debt set the stage for an eventual economic recovery. You heard me say “eventual.” This one’s still gonna be awhile!