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Economy in Brief

Consumer Credit Usage Falls For An Unprecedented Fourth Straight Month
by Tom Moeller July 9, 2009

The consumer continued to deleverage this spring. The Federal Reserve reported late yesterday that consumer credit outstanding during May fell for the fourth straight month and for the eighth month since last summer. The $3.3B decline was the shallowest of the unprecedented streak, but it followed huge double-digit drops during the prior three months. The decline in credit usage has been just one factor behind the recent retrenchment in retail spending though the May drop was short of expectations for a $7.1B decline.

Usage of revolving credit fell a sharp $2.9B during May following an even sharper decline of $8.7B during April. The latest was the eighth decline in as many months and it lowered usage by 3.6% versus one year ago. Non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total, ticked lower by $0.4B in May but the decline was quite a bit shallower than during the prior two months. Compared to the decline in revolving credit usage, the drop here has been less dramatic. The 0.7% y/y shortfall compares to a 6.8% drop after the 1990-91 recession but it is similar to the pullbacks during 1975 and even the "credit crunch" recession of 1980.

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.

Commercial real estate is the topic of today's testimony by Jon D. Greenlee, Associate Director, Division of Banking Supervision and Regulation at the Federal Reserve and it can be found here.

Consumer Credit (m/m Chg, SAAR) May April Y/Y 2008 2007 2006 
Total $-3.3B  $-16.5B -1.8% 1.7% 5.5% 4.5%
  Revolving $-2.9B $-8.7B -3.6% 2.3% 7.4% 6.1%
  Non-revolving $-0.4B $-7.8B -0.7% 1.4% 4.4% 3.6%
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