Americans Pare Down Debt from WSJ
•- U.S consumer are shedding debt at the fastest rate in more than six decades, largely through a wave of defaults, but could also help clear the way for a stronger recovery
•- Total U.S household debt, including mortgages and credit card balances, fell 1.7% in 2009, the first annual drop since records began in 1945
•- Defaults are leaving many people with more cash to spend and save, jump-starting the financial "deleveraging" that economist see crucial to robust growth. Investors and banks wrote off more than $200B in mortgage debt alone in 2009.
•- "The speed of the adjustment is lightning fast because it's happening through debt destruction. It puts us closer to the point where the consumer can start making a stronger contribution to recovery" said Joseph Carson of AllianceBernstein in New York.
•- U.S consumers, whose purchases account for about 1/5 of global activity, have so far made only a meager contribution to the recovery, choosing to take more of their money to the bank and less to the mall.
•- U.S households saved 4.1% of their disposable income in the fourth quarter of 2009, up from 1.2% in early 2008