NEW YORK: For the first time since the Pilgrim Fathers set foot on New Plymouth's beach, the seemingly inexorable growth in America's household debt has ground to a halt – temporarily at least, reports the Federal Reserve.
Household debt in the third quarter fell for the first time ever, by a seasonally adjusted $30 billion (€22.47bn; £20.17bn), a fall of 0.8%, reducing the national total to $13.91 trillion
At the same time, net household worth dropped by the largest amount on record since data collection started in 1951, a fall attributed by the Fed to declining home and stock prices.
An even more alarming debt-reduction factor is the loss by over one million Americans of their homes due to foreclosures over the last fifteen months.
Comments Action Economics chief economist Michael Englund: "Interest rates have shot rapidly higher in the last few months, and people are borrowing less because they don't want expensive credit hanging over their heads.
"The other component is the credit crunch, where qualified borrowers are unable to get credit."
While another observer, Josh Bivens of the Economic Policy Institute, notes: "American households are pulling back on spending in the face of strong headwinds in the job market, and it highlights the reduced willingness of a still-stretched financial sector to extend credit.
He concludes gloomily: "Neither tells us anything good about the kind of economic growth we can expect over the next year."
Data sourced from Business Week (online) and cnnMoney.com; additional content by WARC staff