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 9/10/07 For Jul 2007 | ||||||||||||
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Highlights
Consumer credit rose $7.4 billion in July, a big increase but down from a very swollen $12.0 billion June. Revolving credit rose $5.0 billion in the month with a rise in non-revolving credit making up the balance. High consumer debt may help keep retail growth alive but it does risk greater problems down the road, especially given the prospect of mortgage resets and rising delinquencies. In any case, July data are not the focus of attention right now following August's upheaval in the banking system. August data for consumer credit will be more revealing with gains likely given strong chain-store and vehicle sales posted during the month. Retail sales from the Commerce Department for August will be released on Friday.
Consumer credit surged for a second straight month, up $13.1 billion in June on top of May's $16.0 billion increase. Gains in June were split evenly between revolving credit (largely credit cards) and non-revolving credit (largely vehicle loans).
Consumer credit Consensus Forecast for July 07: +$7.0 billion
Range: +$3.0 billion to +$12.0 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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