Freedom Debt Relief Quarterly Comment: U.S. Economic Recovery Continues

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Company cautions about increasing debt, but cheers stronger performance

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Data may indicate higher confidence in financial conditions, and a willingness to invest, but our concern is that total debt is increasing.

The picture of the ongoing financial recovery in the United States, as painted by economic data, continues to brighten, according to the Freedom Debt Relief Quarterly Comment on consumer debt and credit issues.

“The data for March, as just issued from government sources, confirm that more people are employed. Consumers also are spending more on non-revolving debt, which includes auto and RV loans as well as education loans,” said FDR vice president Kevin Gallegos. “This may indicate higher confidence in financial conditions, and a willingness to invest, but our concern, is that total debt is increasing.”

FDR co-founder and CEO Andrew Housser agreed, saying, “We urge consumers to continue to be aware of their overall financial picture, including the need to plan for the future by saving and spending smartly rather than borrowing.”

A summary of statistics from recent financial reports includes:

1.    Consumer debt rises again. Newly released Federal Reserve Board statistics for February indicate an upward trend in consumer credit. After remaining stagnant in December, consumer credit rose in February for the second consecutive month. The total U.S. consumer revolving and non-revolving debt burden in February was $2.42 trillion (excluding mortgage debt), 3.8 percent higher than the prior month.

2.    Revolving debt continues to decline. The revolving debt consumers carry – which includes credit cards – fell in February to $794.0 billion. This continues the trend that began in August 2008, with revolving debt since then falling every month except December 2010 (when it likely increased due to holiday shopping, Gallegos said). During that period, it has declined by nearly $180 billion, or more than 18 percent.

3.    Non-revolving credit still on the rise. Non-revolving consumer debt – which includes auto and RV loans, education loans, etc. – continues its steady increase. In February, non-revolving consumer debt increased at an annual rate of 7.75 percent. Total non-revolving consumer debt grew by $10 billion over the prior month.

4.    Household debt ratio lower in Q4; will it rise in 2011? As of March, the household debt service ratio (estimated ratio of debt payments to disposable income) was noted to have fallen still further in Q4 2010, reaching 11.75, more than two points lower than its high of 13.96 in Q3 2007. “It is yet to be seen whether this ratio will begin climbing with total household debt,” Gallegos said.

5.    Personal income increases. The Bureau of Economic Analysis (BEA) reports that personal income rose again in February by 0.3 percent, increasing by $38.1 billion, but significantly less than the 1.2 percent jump in January. Disposable personal income (DPI) also increased by 0.3 percent in February.

6.    Spending increased. Personal consumption expenditures fared better than income, increasing 0.7 percent in February as part of an ongoing positive trend. “Economists see this indicator as a positive one, and it can be good if it indicates that people are able to make needed purchases after the recession,” Housser said. “On the other hand, it is somewhat worrisome to see consumers spending at a higher rate than their income is increasing. It is crucial to maintain personal financial discipline by continuing to save and to pay down debt.”

7.    Employment numbers continue to improve. During the most recent quarter, the U.S. unemployment rate fell to 8.8 percent, down 0.6 percentage points from 9.4 percent in December. In March, 13.5 million people remained unemployed in the United States, 1 million lower than in December.

The FDR Quarterly Comment pulls together significant statistical releases and provides quarterly comment on timely debt and credit issues that matter to consumers. To schedule an interview with Kevin Gallegos or Andrew Housser, contact Aimee Bennett at 303-843-9840 or

About Freedom Debt Relief (
Freedom Debt Relief provides consumer debt resolution services. Working as an independent advocate for consumers to negotiate with creditors and lower principal balances due, the company has resolved more than $1 billion in debt for nearly 100,000 clients since 2002. The company is a charter member of The Association of Settlement Companies and a platinum member of the International Association of Professional Debt Arbitrators. FDR holds the Goldline Research Preferred Provider certification for excellence among debt settlement companies.

Freedom Debt Relief is a wholly owned subsidiary of Freedom Financial Network, LLC (FFN). Based in San Mateo, Calif., FFN also operates an office in Tempe, Ariz. The company, with more than 500 employees, was voted one of the best places to work in the San Francisco Bay area in 2008 and 2009, and in the Phoenix area in 2008, 2009 and 2010. FFN’s founders received the Northern California Ernst & Young Entrepreneur of the Year Award in 2008.


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Aimee Bennett