Global| Sep 09 2010U.S. Consumer Credit Outstanding Falls Again
by:Tom Moeller
|in:Economy in Brief
Summary
Debt remains a bad word in consumers' dictionary. As such, they want less of it. Federal Reserve figures released yesterday indicate that consumer credit outstanding fell $3.6B during July following declines during the prior two [...]
Debt remains a bad word in consumers' dictionary. As such, they want less of
it. Federal Reserve figures released yesterday indicate that consumer credit
outstanding fell $3.6B during July following declines during the prior two
months that were revised slightly shallower. The latest was the sixth
consecutive monthly fall. Coupled with larger drops late last year, the 3.1% y/y
decline is just slightly less than last year's record 4.4% decline.
Again, leading the way was a $4.4B drop in revolving credit outstanding. Only modest gains in consumer spending suggest limited usage of credit cards for purchases. They're being used less, however, to carry a balance. The 9.0% y/y decline in revolving credit outstanding was near the -10.2% record set earlier this year. (Prior to 2009, revolving credit had never been negative y/y.) Pools of securitized assets led the decline and were near one-fifth of their peak. Finance company lending again held roughly constant m/m (+35.6% y/y) while commercial bank lending fell for the fourth month (+80.5% y/y) after a March surge. Loans from credit unions were roughly stable (+4.5% y/y) as was lending by savings institutions (+25.1 y/y).
Usage of non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total, rose for the third straight month. The $0.7B monthly increase was the fourth this year and turned the y/y change positive after a 1.3% 2009 decline. The July gain was led by a $4.4B increase in loans from the Federal Government, up by nearly two-thirds y/y. Commercial bank lending also rose a firm $2.0B (8.0% y/y). Pools of securitized assets fell $2.7B and were off by one-half y/y. Finance company lending slipped $0.8B (-2.7% y/y) and credit union lending fell $0.5B (-5.3% y/y).
During the last ten years, there has been a 60% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures. Moreover, these figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.
Credit data are available in Haver's USECON database. The Flow of Funds data are in Haver's FFUNDS database.
The Fed's latest Beige Book covering regional economic conditions can be found here.
| Consumer Credit
Outstanding (m/m Chg, SAAR) |
July | June | May | Y/Y | 2009 | 2008 | 2007 |
|---|---|---|---|---|---|---|---|
| Total | $-3.6B | $-1.0B | $-2.5B | -3.1% | -4.4% | 1.5% | 5.7% |
| Revolving | -4.4 | -5.2 | -4.2 | -9.0 | -9.6 | 1.6 | 8.1 |
| Non-revolving | 0.7 | 4.2 | 1.7 | 0.2 | -1.3 | 1.5 | 4.4 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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