Posted By thestatedtruth.com on August 17, 2010

American households pared their debts last quarter, closing credit card accounts and taking out fewer mortgages as unemployment persisted near a 26-year high, a survey by the Federal Reserve Bank of New York showed.

Consumer indebtedness totaled $11.7 trillion at the end of June, a decline of 1.5 percent from the previous three months and down 6.5 percent from its peak in the third quarter of 2008, according to the New York Fed’s first quarterly report on household debt and credit.

The report reinforces forecasts for a slowing economy in the second half of 2010 as consumers hold back on spending and rebuild savings.

“Everybody understood coming into this recovery that the need for reduction in debt and deleveraging was going to be a pretty significant headwind,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. “Households in particular continue to be much more conservative than in the recent past.”

More on this article at: http://www.bloomberg.com/news/2010-08-17/household-debt-in-u-s-shrank-last-quarter-as-consumers-cut-back-fed-says.html

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