This is good news. Yesterday, the New York Fed came out with their third quarterly report on household debt and credit. (I discussed the first one here, and the second here). Anyway, the good news is that the pace of deleveraging increased (at least by my preferred metric).
The most important graph from the quarterly report itself is this one:
Because that is in nominal dollars, I convert the debt to a percentage of disposable personal income (from the BEA):
The blue line is the data, and the red line is an eyeball extrapolation. Of course, I'm not saying things will continue in a straight line - it's just an illustration that the general pace currently would, if continued, have us deleveraged back to reasonable levels sometime towards the end of the decade.
I like to use the debt-to-DPI measure because it normalizes the debt to people's capacity to service it: their income. This ratio also summarizes all the ways debt can erode: people can pay it off (and not replace it with new balances), they can renegotiate or default on it, or they can just allow it to inflate away over time.
Anyway, to get a clearer sense of the rate of change, here is the prior four-quarter change in the debt-to-DPI ratio:
Last time, it looked like there were some tentative signs of stabilization at a rate of about 5 or 6 percentage points per year of deleveraging. However this data point came in at 7.1% of improvement from Q4 2009 to Q4 2010 - so perhaps the pace is continuing to accelerate. Anyway, combined with otherwise positive signs of stabilization in the US economy in 2010, that seems like good news - we made slightly better progress on getting rid of the mound of debt we ran up in the late 90s and 2000s.
The other graph of particular interest in the report was this one:
This shows the total number of US credit accounts of various kinds. You can see that the credit card line looks like it might have hit some kind of turning point. After sliding every quarter for two years or so, in Q4 2010, it actually increased slightly.