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 6/7/07 For Apr 2007 | ||||||||||||
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Highlights
Consumer credit rose a lower-than-expected $2.6 billion in April, reflecting the month's weak retail sales and only moderate vehicle sales. Revolving credit fell $0.4 billion as consumers, despite high gas prices, managed to scale back credit car use. Non-revolving rose $3 billion, well down from $7.3 billion in March. This report usually has no market impact but given this afternoon's sell-off in the Treasury market, the results, along with today's soft chain-store results and May's soft vehicle sales, may ease concern of unwanted economic strength.
Consumer credit jumped $13.5 billion in March, well above expectations and compared with an upward revised $5.5 billion in February. Revolving credit rose $4.6 billion to $6.8 billion, reflecting higher gas prices and strong retail sales, while non-revolving credit, reflecting solid vehicle sales, rose $3.3 billion to $6.7 billion. Growth in consumer credit is indicating both strong consumer spending and lots of liquidity in the economy. The Fed is certainly paying more attention to these types of liquidity indicators than most and if growth in consumer credit continues to be rapid, that may be one of the reasons the Fed could tighten late this year.
Consumer credit Consensus Forecast for April 07: +$5.0 billion
Range: $3.5 billion to +$10.0 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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