It seems like every few months now there’s a fight over raising our government’s debt ceiling. But at home, individual consumers are lowering their own personal debt ceilings. Ever since the Great Recession pushed many against a wall, a back-to-basics style of personal financial management has been the only viable option for many.
Call it the “Great Deleveraging.”
U.S. debtors have worked off some $200 billion in credit-card debt since 2008. And while much of the decline can be attributed to the card companies writing off bad debts, the net result is fewer cards and smaller balances carried by America’s consumer class.
Per-capita credit-card debt is at the lowest level since 1997. Take a look…
Of course, much like cops and robbers evolve together, banks and credit-card companies have shifted tactics as consumers became less interested in their potential personal-prison-building product. They’ve done it by changing their advertising!
A National Communication Association study showed that print advertisements for financial products declined by at least 20% around 2009. The message changed too, as banks and card companies moved away from emotionally-driven appeals to information-based messages.
To put it in terms of marketing slogans, post-Great Recession taglines sound more like “No matter where you are in life, a solid foundation starts here” (Suntrust Bank, presently) and less like “Live richly,” the message Citi Bank spent $1 billion to perpetuate between 2001 and 2006.
Of course, just because consumers rely less on credit cards doesn’t mean they aren’t spending money. Personal consumption expenditures, as the Bureau of Economic Analysis (BEA) tallied, have shown positive growth for all of 2013.
And with the consumer discretionary sector beating out every other sector as the market’s year-to-date outperformer – up 38% relative to the S&P 500’s 27% – it seems consumers and investors alike are betting on a