The Federal Reserve pinned it’s economic recovery hopes on a simple premise: credit growth leads to rising real GDP by increasing consumption.

The problem is … bank credit growth has slowed to just over 1% (YoY) and the consumer debt to disposable income keeps dropping like a rock.

Here is a chart of Household Debt Service Payments as a Percent of Disposable Personal Income. It keeps dropping and is already below the lowest level since 1980…

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http://confoundedinterest.wordpress.com/2014/02/16/another-fine-mess-consumer-debt-to-income-keeps-falling-but-so-does-credit-growth/