Quite interesting (I see this as a good thing, but economically a negative), as it appears that US consumers unexpectedly paid down their credit cards debt in November...according to the latest Consumer Credit (G.19) report, in November revolving debt, i.e., credit card debt, shrank for a 2nd consecutive month declining by $787 million following the $5.5 billion drop seen in October. This means that in the first 11 months of 2020, US consumers have paid down a record $115 billion in credit card debt (thanks to over-generous stimulus and over-generous unemployment compensation).
The flip side, however, is that as revolving credit dropped, non-revolving credit increased, as in November US consumers increased their student and auto loans the two largest components of this category by over $16 billion...bringing the total November change to $15.3 billion, well above the $9 billion increase expected by economists. Meaning that even as Americans turned frugal on their credit cards, they went to town on loans made where either the Federal Government has some implicit backstop, such as student loans which will likely be discharged in part by the Biden administration, or where they used the cash to buy new cars, iPhones, and other crap, which is also understandable when one can take out a loan with a maturity is well beyond the viable life of the actual goods being purchased (meaning the borrowed would be upside down in said loans).
So is the real
implication from both is that no-one either the lender or the borrower expects
that the loan will ever be repaid (could be another government-forgiveness
where all are made whole), something which cannot be said about credit card
debt (at least for now).
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