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· Consumers steered away from credit last
year. In fact, they avoided it to a record degree as the
outstanding balance fell by $102.3B, or 4.0%, by yearend from 2008.
Released late on Friday, the December decline of $1.8B was the
fifteenth monthly drop since summer 2008 though it was relatively
small. Consumer credit outstanding as a percentage of disposable income
fell to 22.0% from its 2005 high of 24.7%. Nevertheless, these rates
remain up from the low near 16% in 1992.
· Revolving credit usage fell
$8.5B in December and by a record 9.5% during the year. That was part
of a pullback that began late in 2008. Finance companies lowered
lending by more than one third y/y, commercial bank lending fell a
record 14.1%, pools of securitized assets fell 2.6% and savings
institutions pulled back lending by 6.1% y/y. Loans from credit unions
offset some of these declines with a 6.3% increase.
· Usage of non-revolving
credit (autos & other consumer durables), which accounts for
nearly two-thirds of the total, rose $6.8B for December and recouped
most of the November decline. Nevertheless, the 0.7% y/y decline was
the first since 1992. It reflected a 13.8% shortfall in pools of
securitized assets, an 11.7% decline in finance company lending and a
7.2% drop in nonfinancial business credit extensions. These declines
were mostly offset by the federal government & Sallie Mae which
expanded lending by more than two-thirds y/y.
· 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.
· Measuring the
equilibrium real interest rate from the Federal Reserve
Bank of Chicago is available here.
By
Tom
Moeller
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