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 1/8/08 For Nov 2007 | ||||||||||||
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Highlights
Consumer credit jumped $15.5 billion in November vs. a $2.0 billion rise in October. Consumers turned to their credit cards as revolving credit jumped $8.8 billion vs. an already bloated $6.6 billion gain in October. The month-to-month swing was especially sharp for non-revolving credit, a category led by auto loans and that was up $6.7 billion in the month vs. a decline of $4.5 billion in October. Annual rates show revolving credit up 11.3 percent, nearly double the rate of September. Non-revolving credit is up 5.1 percent.
Rising consumer indebtedness is rarely welcome especially when questions are appearing over the strength of the labor market. Yet, consumer willingness to borrow on credit cards could very well have made the difference for holiday sales. Markets showed no reaction to the data.
Consumer credit rose $4.7 billion in October, up from a $3.2 billion increase in September. Constraints on home equity credit continue to push consumers to their credit cards as revolving credit rose a sizable $6.4 billion vs. a $4.5 billion increase in September. The annual rate of increase in this category is in the high single digits, beyond the mid single digit gains for retail sales. With delinquency rates rising, markets and the Fed may be giving consumer credit data more attention than in recent months.
Consumer credit Consensus Forecast for Nov 07: +$9.0 billion
Range: +$4.0 billion to +$11.0 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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