| Consumer Credit |
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Released On 9/10/2012 3:00:00 PM For Jul, 2012
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Consumer Credit - M/M change | $6.5 B | $9.8 B | $9.8 B | $5.0 B to $14.9 B | $-3.3 B |
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Highlights
July was a very strong month for retail sales but consumers apparently were paying cash and keeping their credit cards in their wallet. Total credit outstanding fell $3.3 billion in July with revolving credit falling $4.8 billion for a second straight monthly decline. The early indications for August retail sales are positive which hints at a rebound for the revolving credit component in next month's consumer credit report, assuming that is that consumers returned to old habits. Non-revolving credit rose $1.5 billion in August, an increase that's lower than trend and reflecting a slowing in student loans.
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Market Consensus before announcement
Consumer credit outstanding rose $6.5 billion in June, following a $16.7 billion jump the month before. The latest gain was led by non-revolving credit, gaining $10.2 billion in June after a $9.2 billion rise in May. Non-revolving credit is mostly for motor vehicle purchases and student loans. As unit new motor vehicle sales increased 3.1 percent in June, some of the boost likely was auto related. But in recent months, non-revolving credit has been lifted by strong gains in student loans. The revolving credit component was not good in June, declining $3.7 billion but following a $7.5 billion boost in May. The June dip largely reflected soft retail sales for the month. Looking ahead, retail sales were strong in July but motor vehicles slipped. So there is support for a gain in revolving credit in July but nonrevolving credit may be soft unless student loans add lift.
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Definition
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
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![[Chart]](showimage.asp?imageid=23163)
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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.
Data Source: Haver Analytics
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