The Middle Eastern and North African rebellions have generated $100-oil and fears of its potential impact on the economy.
This letter has expressed the view that a slowdown in the economic recovery and economic expansion is a greater risk than soaring consumer prices.
Thus far, however, oil's impact on consumer demand is not evident.
The Commerce Department reported February automobile sales of 13.4 million at a seasonally-adjusted annual rate. That's a nice bump upward from January's 12.6 million figure. New-vehicle sales have grown strongly throughout the winter.
Yesterday the Federal Reserve announced that consumer credit rose at a $60 billion annual rate in January. (Consumer credit measures automobile-borrowing and credit-card borrowing and other kinds of household indebtedness other than mortgage or real-estate borrowing.)
Consumer Credit
Recessions shaded
The chart clearly illustrates the unprecedented decline in consumer credit associated with the recent recession. Households stopped borrowing in order to repair their balance sheets by conserving cash and reducing debt. That, of course, crippled household spending and was an important ingredient in the slump.
Now, however, the strong auto-sales (13.4 million) and consumer-credit ($60 billion) data confirm that the worst is behind us. Monthly increases of $100 billion at a seasonally-adjusted rate, such as those we saw during the recent boom, may still elude us. But there is cause for optimism.
(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.)
© 2011 Michael B. Lehmann
1 comment:
Consumer credit increased at an annual rate of 3-3/4 percent in February 2011. Nonrevolving credit increased at an annual rate of 7-3/4 percent, while revolving credit decreased at an annual rate of 4 percent. The prospects of economy seem optimistic. However, I questioned this view, because first, the number of motor vehicles per 1000 people in U.S. is already more than 800, the new-vehicle market will not always have a steady increase. The main driving force of economy----------housing market has not improved yet, the Auto market and stock market cannot keep the economy go better forever.
Post a Comment