Americans Are Getting Fiscally Fit, and It Shows

It may have taken the Great Recession to break Americans out of their ‘pay as you go’ mentality, but they are starting to act more financially responsibly now. At least so say the latest reports from the Big Banks, according to a recent BusinessWeek article.

Specifically, more American consumers are paying their bills on time, and defaulting less on credit cards and mortgages.

Says BusinessWeek,

“the reports are a sign that Americans are feeling more comfortable about their finances. Personal spending powers about 70 percent of the U.S. economy, and most economists say a fiscally fit consumer is critical to a strong economic recovery.”

Those signs include the following:

• In the last quarter of 2010, Wells Fargo consumer loan defaults were down 29 percent over the previous year.
• During the same time, Citigroup had a 22 percent decrease in loan losses from the previous quarter because fewer customers were falling behind.
• Bank of America, JPMorgan Chase and Citigroup all reported dramatic improvement in credit card late payments during the last months of 2010.
• All three banks also said their customers were carrying drastically lower credit card balances in the fourth quarter.
• Mortgage delinquencies dropped off in that quarter as well. Citigroup saw its percentage of loans that were 90 days overdue fall from 2.7 percent to 2.1 percent.

While all the bank head honchos remain cautious about the economic outlook for the year, JPMorgan CEO Jamie Dimon did venture to say “there are signs of stability and growth,” based on the latest statistics.

The major signs that things may not yet be falling into place include the continued reluctance on the part of banks to loosen their lending standards. All but the most credit-worthy are still finding it hard to find funds, whether they be for small business loans, mortgages, or even credit cards. Once those credit spigots start to open up again, we’ll know things are truly getting better.