Consumer Credit Growth Under Wraps

The Federal Reserve reported that consumer credit outstanding rose just 1.7% during all of last year. That growth in U.S. credit usage was its lowest since 1993. The slowdown was led by revolving credit outstanding (credit cards), which fell $6.4 billion during December and the year-to-year growth of 2.6% was its lowest since 2004. Yearend, however, the three-month change was quite a bit weaker. It plummeted to -5.3%, a record rate of decline.

A $6.6 billion December decline in overall consumer credit outstanding followed a downwardly revised $11.0 billion November drop, reported last month as an $8.0 billion decline. These latest declines pulled the three-month growth in credit outstanding to -3.0% (AR) which was the lowest since the recession of 1990-91.

Non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total, grew just 1.2% last year and in December it dropped for the fourth month in the last five.

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 Federal Reserve Board on Friday released additional terms and conditions--including loan rates and collateral haircuts--of the Term Asset-Backed Securities Loan Facility (TALF). The Fed's release can be found here.

Raising the credit bar, or getting clubbed by it? from the Federal Reserve Bank of Minneapolis is available here.

Kazuo Momma, head of Research and Statistics at the Bank of Japan, commented in a recent speech that the Japanese economy may have declined at an "unimaginable speed" in the fourth quarter of last year. Estimates of a seasonally adjusted annual rate of decline as large as 12% are not uncommon. (The official estimate of GDP in the fourth quarter of 2008 is scheduled to be released on February 16th.

Among the data for the fourth quarter that are now available, the export sector shows a very speedy decline. Exports were down 8% in October from a year ago, 27% in November and 35% in December, as shown in the first chart. While most countries saw their exports decline with the fall in world demand, a sharp rise in the yen exacerbated the picture for Japan. The J.P. Morgan Broad Nominal Trade-Weighted Exchange Rate for Japan is compared with those of the Euro Area and the United States in the second chart. The rise in Japan's trade weighted exchange rate relative to the others since September stands out.

The Economy Watchers, who monitor household and corporate activity, published their January report today. While it show some improvement in January, the diffusion indexes for both the households and corporations were at their all time low levels in the fourth quarter of 2008 as shown in the third chart. The January diffusion indexes are still very low at 19.2% for corporations and 24.2% for households.