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 7/8/08 For May 2008 | ||||||||||||
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Highlights
Consumer credit isn't showing much pressure thanks to fiscal stimulus which is helping to offset weak wage growth. Consumer credit outstanding rose $7.8 billion in May, the same increase as a downwardly revised April ($8.9 billion previous) and on the lower side of trend. Revolving credit is a little on the high side at a $5.7 billion gain in May but follows a small decline in April. Weak light truck sales are another factor keeping consumer credit in check, with non-revolving credit up only $2.1 billion vs. $8.2 billion in April and the smallest gain of the year. Once tax rebates fizzle out and unless gas and food prices ease, consumers in future months are likely to turn more and more to credit to make ends meet.
Consumer credit rose a moderate $8.9 billion in April reflecting a $8.7 billion jump in nonrevolving credit, a surprising jump given the month's very soft vehicle sales. The rise in nonrevolving credit was the largest since August. On the revolving side the news was good with only a $0.3 billion rise for the lowest reading since a contraction way back in May 2005.
Consumer credit Consensus Forecast for May 08: +$7.0 billion
Range: $5.0 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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