This decrease in spending temporary slows down the economy, however if interest rates will allow to float the savers would be rewarded with higher interest for their saving.
"Americans are borrowing less and paying off more debt than in the recent past. This change, which we continue to study carefully, can be a result of both tightening credit standards and voluntary changes in saving behavior," Donghoon Lee, senior economist in the Research and Statistics Group at the New York Fed said in a statement.
"Lending practices are tight making it more difficult for people to secure new debt," said Chris Viale, president and CEO of Cambridge Credit Corp., a nonprofit credit counseling agency based in Agawam, Mass. "The only choice they have is paying down debt."
At the state level, Arizona, California, Florida and Nevada continued to post higher-than-average delinquency and foreclosure rates than the nation as a whole.
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