The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns. Why Investors Care
| Released on 3/7/07 For Jan 2007 | ||||||||||||
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Highlights
Consumer credit rose $6.5 billion in January, up from a $5 billion increase in December. Despite soft vehicle sales, January's increase was concentrated in nonrevolving credit. Revolving credit rose modestly in line with moderate gains across most retail categories. Still today's overall increase is a bit more than expected, perhaps suggesting that consumers had to turn to credit rather than income growth to fund purchases.
Consumer credit slowed in December to a $6.0 billion increase, following a sharp $13.7 billion surge in November. Most of the slowing was in revolving credit. With consumer spending up in January, it will be telling to see whether a rising share was funded out of credit or from income growth. Moderate credit growth in January would indicate that the consumer has more staying power with spending coming out of income growth rather than cutting into available credit.
Consumer credit Consensus Forecast for January 07: +$5.0 billion
Range: +$2.0 billion to +$10.5 billion
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The debt-to-income ratio shows how indebted consumers are relative to income. A rising ratio indicates that consumers are taking on greater debt burdens with respect to income growth. In a growing economy, this may not be dangerous. However, indebtedness could quickly become a problem if income and employment conditions turn around. The yearly change in debt outstanding shows yearly trends in debt growth and tends to be less volatile than the monthly change. |
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