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These Charts Say All You Need to Know About Current Credit Conditions in the U.S.

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Five charts from the Federal Reserve illustrate the current credit conditions in the U.S.

First, take a look at the total debt balance and what its comprised of:

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Aggregate consumer debt continued to decline in the second quarter, continuing its trend of the previous six quarters. As of  June 30, 2010, total consumer indebtedness was $11.7 trillion, a reduction of $812 billion (6.5%) from its peak level at the close of 2008Q3, and $178 billion (1.5%) below its March 31, 2010 level.  Household mortgage indebtedness has declined 6.4%, and home equity lines of credit (HELOCs) have fallen 4.4% since their respective peaks in 2008Q3 and 2009Q1. Excluding mortgage and HELOC balances, consumer indebtedness fell 1.5% in the quarter and, after having fallen for six consecutive quarters, stands at $2.31 trillion, 8.4% below its 2008Q4 peak.

The second chart shows the number of accounts by loan type. Note the blue line, which shows the precipitous decline in the number of credit card accounts, certainly impacting issuers, such as Capital One, Mastercard and Visa.

About 272 million credit accounts were closed during the four quarters that ended June 30, while 161 million accounts were opened.

Meanwhile, credit card limits have been cut at a faster rate than balances have been reduced, the net impact certainly showing up in the form of lowered credit scores and a decline in credit quality.

And here's a look at the number of consumers with new foreclosures and bankruptcies. Keep in mind that foreclosures remain muted in many states due to the ongoing issue of paperwork and questions about the process of foreclosure.

About 496,000 individuals had a foreclosure notation added to their credit reports between March 31 and June 30, an 8.7% increase from the 2010Q1 level of new foreclosures. New bankruptcies noted on credit reports rose over 34% during the quarter, from 463,000 to 621,000. While we usually see jumps in the bankruptcy rate between the first and second quarter of each year, the current increase is higher than in the past few years, when it was around 20%.

Lastly, here are quarterly transition rates (from 30-60 days late and to 90-days late) for current mortgage accounts. This paints a sobering picture for those who may have assumed the worst of the mortgage crisis is behind us.

About 2.6% of current mortgage balances transitioned into delinquency during 2010Q2, continuing the decline in this measure observed over the last year. Transitions from early (30-60 days) into serious (90 days or more) delinquency improved sharply in 2010Q2, falling from 39% to 33%, the lowest rate of deterioration since 2008Q2. Nonetheless, despite recent improvements in this rate and the "cure" rate - transitions from delinquency to current status, which rose to nearly 30% - both remain at very unfavorable levels by pre-crisis standards.
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