U.S. Consumer Credit Growth Eased in December but Accelerated in 2007

At an annual rate consumer credit grew 2.2% during December, down sharply from the revised 8.5% jump in November. For all of last year, however, credit growth picked up slightly to 5.5% from 4.5% in 2006. In fact growth last year was the quickest since 2004. (The annual rates of growth equal the Dec/Dec percent because the figures are "end of period.")

Continuing to indicate the slowdown in consumer spending was the three month change in credit. It fell to 4.4% which was nearly half the growth rate of this past August.The credit slowdown has been accompanied by slower three-month growth in real consumer spending on durable goods, to -2.8% thru December versus +4.8% for all of last year.

Non-revolving credit, which accounts for nearly two thirds of the total, grew a slower 1.8% in December versus November. The three month growth rate remained quite low at 1.5% versus a peak of 7.7% in August.

Growth in revolving credit also slowed considerably to 2.7% (AR) in December from 14.7% in November. That slowdown left the three month growth rate at a somewhat firm 9.6%.

These figures are the major input to the Fed's Flow of Funds accounts for the household sector, released quarterly.

The Recession Dating Procedure from the National Bureau of Economic Research (NBER) can be found here.

German output shows signs of slowing. The sequential growth rates in the table demonstrate that growth has slowed steadily from 12-mos to 6-mos to 3-mos. Output of consumer goods, weak over the entire period has weakened further in the recent three months. Capital goods output, long the strength of German manufacturing is showing some clear signs of weaker growth. Oddly, against that back drop the output of intermediate goods has ramped up.

For the quarter output is up a solid 2.2%, but that is down sharply from over 8% in Q3. For the quarter the sectors are mostly solid, with weakness in the output of construction goods being the weak exception.

The OECD indices sure do look like ‘slowdown’ but with the exception of Japan, the indicated weakness is not yet that severe. In the case of Japan, while the OECD reading had been severe, its low point has passed as Japan’s signal now points to recovery, diminishing the sour signal. Over the preferred horizon to view these indicators, six months, it is the US that is weakest in this grouping.

With the G-7 meeting this weekend there is not much cheer from theses indicators. While the OECD measures have Japan on the mend, Japan’s own domestic yardsticks are still producing increasingly weak readings for some of its preferred cyclical measures.

Japan’s Economy watchers Index and the Teikoku Indices show the weakest economic readings in five years. The economy watchers indices are down to values of around 30 to 36. And while they are the weakest we have seen in 5 years they are also approaching some of their weakest readings ever. The future index is particularly grim. While the OECD format (though Dec) shows the Japan trend restored LEIs as having turned the corner and headed up, the economy watchers indices show the economy still looking for a bottom. The Teikoku readings agree with the economy watchers indices and see weakness right across the board that was bad in December and got worse in January.