The worst recession in decades ended the illusion that Americans were managing debt wisely. IOUs worked fine when people had jobs. Not so much now.
So is our love of high leverage over? We don’t know that yet, but it’s pretty clear we’re pulling back.
New data from Federal Reserve data show a big drop in consumer credit starting at the end of 2008 and continuing through the first half of this year. Looks even more dramatic if you chart it from 1999:
The debt pullback lines up with what sources in MPR’s Public Insight Network tell us about their spending habits. They continue to hold back on the big ticket purchases. Some recent responses:
Nancy Kafka, a network source from Red Wing, told us she’s putting off home improvements (porch roof, interior bookshelves) “and even a painting project that I could do myself. Basically am not buying any non essentials at this point.”
Jane Wilson of Bloomington told us she needs to buy a bed, “but that’s an essential. Putting off buying sports equipment and making cabin improvements. My property taxes have been going through the roof, so I have to save at least $500 per month for the property taxman. AARGGH!
Heidi Christian of Eagan told us she plans to buy a vacuum but, “I am putting off buying a new washer, even though mine is broken and I have to beat on it to get it to start, it still works, so I won’t replace it until I absolutely need it.”
All that dovetails with recent data showing rising savings rates among Americans.
Cash for clunkers is drawing some of us back into the new car market. But at this point we’re saving more and much less willing to sign our names to the “easy” long-term payment plan.
What are your spending habits like these days? Use this form and tell us a story about what you’re doing with your money. Check out the map below for what others in our Network are saying about money issues.