Global| Oct 10 2011U.S. Consumer Credit Extension Pulls Back
by:Tom Moeller
|in:Economy in Brief
Summary
Consumers may have developed some economic uncertainty. Reported late Friday, overall consumer credit outstanding fell $9.5B following a revised $11.9B July rise, initially reported as $15.5B. An $8.0B increase had been expected by [...]
Consumers may have developed some economic uncertainty. Reported late
Friday, overall consumer credit outstanding fell $9.5B following a revised
$11.9B July rise, initially reported as $15.5B. An $8.0B increase had been
expected by Action Economics. It was the first monthly decline in credit
since September of last year. Credit has risen 2.1% during the last twelve
months following the 1.7% decline during 2010.
Non-revolving credit, which accounts for nearly two-thirds of the total, backpedaled $7.3B and reversed half of the July gain. Nevertheless, the 4.6% y/y change builds on the 1.5% increase last year. Loans by the Federal government rose by more-than one-half y/y but finance company lending fell 4.5% y/y. Commercial bank credit also fell 4.8% y/y but saving institutions lending ticked up 0.5% y/y. Nonfinancial business credit inched up 0.9% y/y but pools of securitized assts fell 20.3% y/y.
Consumers also reduced revolving credit balances during August by $2.2B and it lessened the y/y decline to 2.8%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 15.2% y/y and commercial bank credit fell 4.4% y/y. Meanwhile, finance company credit rose 6.3% y/y while savings institution credit jumped 13.0% y/y. Credit union lending rose a stable and slower 2.3% y/y and nonfinancial business credit remained unchanged.
During the last ten years, there has been a 53% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures, although the correlation recently has weakened considerably. The credit figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.
The consumer credit data are available in Haver's USECON database. The Action Economics figures are in the AS1REPNA database.
| Consumer Credit
Outstanding (M/M Chg, SAAR) |
Aug | Jul | Jun | Y/Y | 2010 | 2009 | 2008 |
|---|---|---|---|---|---|---|---|
| Total | $-9.5B | $11.9B | $11.3B | 2.1% | -1.7% | -4.4% | 1.5% |
| Revolving | -2.2 | -3.6 | 2.6 | -2.8 | -7.5 | -9.6 | 1.7 |
| Non-revolving | -7.3 | 15.5 | 8.8 | 4.6 | 1.5 | -1.3 | 1.5 |
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.
