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 7/9/07 For May 2007 | ||||||||||||
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Highlights
Consumer credit jumped $12.9 billion in May showing big gains for both revolving credit, up $7.2 billion, and non-revolving credit, up $5.7 billion. The gain in revolving credit reflects higher gasoline prices but also the month's wide gains in other retail categories. The rise in non-revolving credit reflects higher vehicle purchases which were the strongest in nearly two years.
High credit usage has wide negatives for the economy, including pressure on savings and the trade deficit. But credit usage is likely to ease back in June given the month's solid job and wage growth along with the month's soft vehicle sales, data which have already been released. Data yet to be released, Friday's retail trade report, are expected to be soft which would also point to slowing credit usage.
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.
Consumer credit Consensus Forecast for May 07: +$5.6 billion
Range: +$4.2 billion to +$9.4 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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