The WSJ details:
Americans reduced their borrowing a sixth consecutive time during July in a bad omen for any easy economic turnaround.
The chart below shows the change in the composition of those entities holding the outstanding stock of consumer debt. The largest (to no surprise) reductions have come from financial companies and securitized pools (i.e. your pension fund). The only "substantial" increase has come from... you guessed it... the federal government.
Consumer credit outstanding tumbled a seasonally adjusted annual rate of 10.4% to $2.472 trillion, the Federal Reserve said Tuesday. The $21.6-billion drop in borrowing was a record.
Wall Street projected a $3.5 billion decline in consumer credit during July. Borrowing in June fell $15.5 billion, revised down from $10.3 billion. The last time credit fell six straight times was in the second half of 1991.
The consumer credit report is an indicator of spending by Americans. Consumer spending makes up 70% of gross domestic product, which is the broad measure of U.S. economic activity. People, afraid of unemployment and stuck under high household debt, aren't spending briskly, a restraint that held the economy in a slump and is seen preventing a quick recovery. Analysts expect more deleveraging by U.S. households.