Contrary to analysts’ predictions that it would rise by $.5 billion in February, consumer credit actually dropped by $11.51 billion! Revolving credit saw the most dramatic decrease, with consumer debt on revolving credit and charge cards falling by $9.44 billion. This development comes on the heels of more good news of a growing U.S. job market and boost in worker confidence.

Beyond the $9.44 billion drop in revolving consumer credit (a decrease of 13.06 percent  annual rate) note that:

• Non-revolving consumer credit also fell in February, by $2.07 billion, or at a 1.56 percent annual rate
• February’s dramatic drop in consumer credit follows an increase in January of $10.64 billion
• Decreased consumer credit suggests we’re going to see a spike in savings rates

If you are among the millions of Americans whose credit card debt decreased in February, you’re on the right track toward improving your family’s financial picture. On the flip side of that coin, though, is the implication that decreased credit card debt implies less consumer spending – critical to a recovery as consumer spending represents an estimated 70 percent of the U.S. economy.

That said, analysts say Americans’ reduction of credit card debt is unlikely to have a noticeable impact on consumer spending. (Though it’s worth noting they’re probably the same analysts for whom this dramatic drop in consumer debt came as a big surprise.)

At least one expert’s assessment of the situation certainly has merit:

Americans’ decrease in consumer credit “does point to a lack of confidence on the part of consumers,” says Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York.

“[Consumer] caution may well mean this recovery is still a fragile, one.”

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