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Economy in Brief

U.S. Consumer Credit Outstanding Continues To Fall
by Tom Moeller November 09, 2009

Consumers continue to deleverage as the prospects for employment remain uncertain. The Federal Reserve reported late Friday that consumer credit outstanding fell for the eighth consecutive month during September. It also was the twelfth monthly decline since summer, 2008. The $14.9B drop from August followed declines during the prior two months which were revised shallower, but the y/y change amounted to a record 4.8% drop.  With these declines, consumers have reduced credit outstanding as a percentage of disposable income to 22.6% from its 2005 high of 24.4%. This compares to the low near 16% in the early-1990s.

Usage of non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total, fell $4.9B after a slight August increase. The 2.3% y/y decline was a record. Consumers continued also to cut back on revolving credit usage. During September it fell a near-record $9.9B for the twelfth consecutive monthly drop. Year-to-year the 8.8% decline is by far the record as consumers continued to shy away from liberal spending.

Finance companies (-12.3% y/y), savings institutions (-9.8% y/y), nonfinancial businesses (-6.4%) and commercial banks (-1.5% y/y have seen the largest pullbacks in credit extension while credit unions continue to see positive growth (1.9% y/y). The Federal government and Sallie Mae also continued to lend during September and raised credit outstanding by 23.9% y/y which was the strongest growth rate since early-2001.ยท 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.

Monetary Policy Stance: The View From Consumption Spending from the Federal Reserve Bank of St. Louis is available here 

Consumer Credit Outstanding (m/m Chg, SAAR) September August Y/Y 2008 2007 2006 
Total $-14.8B  $-9.9B -4.8% 1.6% 5.6% 4.1%
  Revolving $-9.9B $-10.1B -8.8% 1.9% 7.8% 5.0%
  Non-revolving $-4.9B $0.2B -2.3% 1.4% 4.4% 3.6%
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