U.S. Consumer debt increased in March 2008 by $15.3 billion on a seasonally adjusted basis. During the first quarter, consumer debt increased by $34 billion, the most since the first three months of 2001 before the 2001 recession. Growth in consumer debt dropped dramatically during the recession. This is typical of recessions. Consumer debt usually peaks before the start of the recession and declines during a recession as consumers tighten their belts and banks tighten their lending standards.
The headlines from the media on consumer debt suggest that the "slowing economy is forcing Americans to accumulate credit-card and other forms of debt." This would be going against the grain of the pattern of declining growth of consumer debt during recessions. On a non-seasonally adjusted basis, consumer debt actually declined by $16.3 billion since December 2007. It is the seasonal adjustments that lead to an increase of $34 billion. Year over Year on a non-seasonally adjusted basis the growth rate has turned flat. The growth rate usually vacillates with steep slopes in the growth rate. The periods where it is flat is typically at the tops and bottoms. Meanwhile, mortgage delinquencies are rising at a faster pace than consumer loan delinquencies. While consumer loan and mortgage delinquencies normally rise and fall together, consumer loan delinquencies have typically been more volatile than mortgage delinquencies. This time around, it looks like the problems are being driven by the housing crisis.
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