Consumers are feeling poorer, saving more and spending less. With the exception of refinancing their homes, they’re also borrowing less.

Total American consumer debt stands at $2.564 trillion. It had gone down three months in a row before expanding by $1.8 billion in January.

The consumer credit report comes out today and demand for credit is expected to resume its fall. Total debt is expected to decline by $1.5 billion in February.

Consumers are certainly feeling the pinch. Equifax reported last month that…

• Total personal bankruptcy filings rose 25 percent in January from a year ago
• Almost 40 percent of homeowners with subprime credit scores of 619 or lower were 30 days or more behind on their loans
• The number of credit cards fell by 30 million since the July 2008 peak to 408 million in January.
• 18.8 percent more auto loans were 60 days behind on their payments compared to the January before.

Despite all these headwinds, a small uptick in big ticket orders recently may indicate that lower interest rates on mortgage loans are loosening up consumers’ wallets.

I’m looking for the February consumer credit report to beat expectations. But consumers aren’t out of the woods. As long as home prices continue to decline and the economy continues to lose over 600,000 jobs a month, consumers will be reluctant to spend on credit.

Source: Consumers Are Still Playing Defense