After a more than a decade of conspicuous consumption, it appears that consumers may be starting to view credit card debt as a four-letter word. It was reported today that consumer credit contracted by $7.5 Billion in February, which was more than seven times the economist estimates for a decline of $1 Billion. What’s more, it was the 5th decline in credit outstanding in the past seven months.

The biggest contributor to the decline was a huge 10% drop in revolving credit (i.e. credit cards) which was the largest drop since January of 1978. And when compared to a year ago, credit has increased by just 1.1%, which is the slowest pace in 16 years. Thus, the numbers tell the story of consumers keeping their credit cards in their wallets.

While this trend may be a good thing for the overall health of the U.S. consumer, it may not be as healthy for the nation’s retailers. Thomson Reuters data shows that March same-store sales are expected to have declined by -1%.

Craig Johnson, president of retail research firm Customer Growth Partners told Reuters, “We don’t see any signs of significant improvement, with the exception of a continued full-fledged flight to value retailers.”

As Reuters points out, if one removes Wal-Mart (WMT) from the mix, same store sales may be down as much as -5.3% during the month of March. Wal-Mart is expected to post a 3.2% increase in sales.

However, analysts are quick to point out that the weather and Easter coming later this year may have hurt sales. Thomson Reuters data shows that department stores could show sales declines of nearly -10% and apparel stores could see drops of -8.4%.

So, while economists are expecting the economy to improve in the second half of this year, we don’t see any signs of it so far in the retail sector.

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