On January 8 The Federal Reserve announced (http://www.federalreserve.gov/releases/g19/Current/) that consumer credit fell $8 billion in November. Multiply that monthly figure by 12 to put it on an annual basis, and you have a roughly $96 billion decline.
The following chart shows that this is a big setback, especially if sustained in the coming months.
Consumer Credit
(Click on chart to enlarge)
(Recessions shaded)
Consumer credit supports the purchase of many durable goods, especially motor vehicles. During the real-estate boom households treated their homes like fountains of money, refinancing their mortgages and using the proceeds for auto purchases. Now that this avenue is closed, consumer credit play a more important role and is an increasingly sensitive indicator of consumer expenditures.
The Fed customarily publishes this statistic around the fifth of each month. Track it to find the pulse of household expenditures.
Consumer credit supports the purchase of many durable goods, especially motor vehicles. During the real-estate boom households treated their homes like fountains of money, refinancing their mortgages and using the proceeds for auto purchases. Now that this avenue is closed, consumer credit play a more important role and is an increasingly sensitive indicator of consumer expenditures.
The Fed customarily publishes this statistic around the fifth of each month. Track it to find the pulse of household expenditures.
(The chart was taken from http://www.beyourowneconomist.com. [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)
© 2009 Michael B. Lehmann
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