Consumer Deleveraging Continues

For those who say that the consumer has "de-levered" enough, and thus we will return to prosperity and borrowing, The Fed threw a big bucket of cold water on that:

Consumer credit decreased at an annual rate of 5-1/4 percent in the second quarter. Revolving credit decreased at an annual rate of 8-1/4 percent, and nonrevolving credit decreased at an annual rate of 3-1/2 percent. In June, consumer credit decreased at an annual rate of 5 percent.

Or if you prefer it in pictures, here it is:

Note that revolving credit is being defaulted and paid down (probably much of the former!) much faster than non-revolving.  Here’s the breakdown:

So much for the argument that "The Consumer is fine" and will "return to spending like a drunken sailor."

Uh, what will he spend when he is paying down debt while income, as reported by personal earnings, continues to contract or be flat?