Tuesday, April 7, 2009

Consumer Credit Drops

Good news: consumers are deleveraging
Bad news: consumers are really deleveraging

The Fed's G.19 release indicates a February drop of $7.5 billion in total consumer credit, $4.5 billion more than consensus. The bulk of the monthly change was due to a significant reduction in revolving lines of credit: almost $7.8 billion or nearly a 10% change, while non-revolving credit demonstrated a slight increase.

Judging by the market's secondary knee jerk reaction, an increase in savings is a good thing for the bull rally.

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Anonymous said...

Why would I want to borrow my own tax dollars back from some thieving bank and pay the pricks interest to do it? Screw'em

CFischer said...

That's an ANNUALIZED 10% change. Not quite as dramatic.

Anonymous said...

Since Moody's reported that the banks wrote down 8.82% of consumer credit card debt in February, then would it be safe to assume that the actual decrease in credit card spending was more like 0.9%? This would be more in line with February reports on the decline in retail sales unadjusted of 0.4%.

Anonymous said...

So much for the consumer-driven recovery everyone was hyping last week.

Anonymous said...

Juxtaposing comments #2 and 3, the annualized bank writeoffs of 8.82% in February are the largest part of the annualized 9.7% reduction in revolving credit. The annualized reduction in credit card debt by consumers not in arrears is a mere 0.9%. Given that average wages are flat or deflating, unemployment is increasing at an annualized rate of 13% and credit card rates are increasing, the data suggest that there will be many more writedowns to come.

Anonymous said...

I am of the same mind as the commenter right above. I don’t get this savings increasing idea. Show me the savings. At best households stopped debt acquisition and try to pay off some of it. That’s still not savings. Perhaps, “dis-savings” (as in dis-inflation) would be a better term. The rate of dis-saving has mild decreased.