Our College, Mortgage Debt Is Falling, But We Still Need New Cars

NEW YORK (TheStreet) -- Consumer sentiment softened a bit last month, but Main Street America's outlook on the economy is still light years better than during the last half of 2013.

According to TradingEconomics.com, U.S. consumer sentiment slid from 82.5 in December to 81.2 last month. But those levels are way ahead of the mid-70s levels seen in September, October and November.

Maybe that relatively seesaw outlook from Americans can explain why consumer debt levels were in retreat last year.

Manilla, the New York City digital mailbox services provider, says overall U.S. consumer debt fell by 4%.

"There are a number of factors at play when considering why overall debt is lower going into 2014, including the fact that we've seen a steady drop in unemployment throughout the year, from 7.9% nationwide at the end of January 2013 to 6.7% at the end of December," says Jim Schinella, CEO of Manilla. "Improved employment equates to more people having funds to pay down existing debt."

Manilla says student loan and mortgage debt is down as consumers scramble to get cash liquid in hopeful anticipation of a resurgent economy.

The report says that the average student loan debt of $14,411 is down by 6.75% from the end of 2012. Regional economies can strongly influence student loan paydowns, though. Atlanta, which has seen its unemployment rate fall from 8.3% to 7.4%, was near the top of the list of cities where residents are paying down college debt at a faster clip. Albany, N.Y., in a state where unemployment is still relatively high, has an average student debt level of $18,380, and residents are paying off student loans more slowly.

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