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Consumer Debt is Down, Spending Up. But It’s All Good.

The latest consumer debt numbers are out, and the news is good.  Consumer debt decreased in February, as card holders held back on using their plastic.

Overall, consumer debt was down to $794 billion, as illustrated in the graphic. 

This decrease continues what has been a steady decline in card balances.  Beginning in September 2008, card balances have gone down nearly every month.  Balances did rise in December 2010, but in retrospect that can almost be viewed as a good thing as it was one of the first economic indicators to show some positive movement in some time following the recession.

What’s especially interesting about this is that this week the Commerce Department announced that consumer spending went up 0.7 percent.

Can we surmise that while consumers are spending more, they are paying in cash or paying their card balances in full?  Perhaps.  As we’ve commented in the past, we’re a long way from folding up our tents and declaring victory because every American consumer is financially literate.  But it’s still some good news, both from an economic perspective and from a personal finance perspective.


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