IMGCAP(1)]
U.S. households reacted to declining home values, a plunging stock market and the loss of more than $2.8 trillion in collective net wealth by paying down their debts for the first time on record, since 1952, the Federal Reserve reported today. Consumer debt fell at an annual rate of 0.8%, to $13.91 trillion in the third quarter ended Sept. 30, the Fed reports in its quarterly flow of funds report, a look at consumer and business finances. Households also paid off more mortgage debt than they took on for the first time on record. Mortgage debt fell at a 2.4% annual rate to $10.54 trillion during the quarter. Consumer debts, such as credit cards and auto loans, increased at a 1.2% annual rate during the third quarter to $2.6 trillion. Hit by declining home values and stock market losses, consumers watched their net worth decline for the fourth consecutive quarter, by $2.8 trillion, or 4.7%, to $56.5 trillion during the third quarter.
