Econoday Report: Consumer Credit November 6, 2009

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Consumer Credit

Released on 11/6/2009 3:00:00 PM For September, 2009

	Prior	Consensus	Consensus Range	Actual
Consumer Credit - M/M change	$-12.0 B	$-10.0 B	$-20.0 B to $-6.0 B	$-14.8 B

Highlights
Between consumers sticking their money into savings and banks cutting back on loans, consumer credit continues to tighten and dramatically. Consumer credit outstanding fell $14.8 billion in September to extend a long run of declines. Revolving credit, mostly credit cards, fell $9.9 billion with non-revolving, mostly car loans, down $4.9 billion. What little good news there may be is that the rate of contraction is easing as consumer credit contracted at a 6.1 percent pace in the third quarter vs. 6.6 percent in the second quarter.

Market Consensus Before Announcement
Consumer credit outstanding has been showing signs of ill health as consumer credit outstanding contracted a steep $12.0 billion in August after a giant $19.0 billion drop in July. Revolving credit outstanding fell $9.9 billion, following a $2.4 billion decline in July. Non-revolving credit got support from cash-for-clunker sales, helping to limit the decrease in August to only $2.1 billion—much less severe than July's $16.6 billion contraction. Looking ahead, September is likely to be a large negative as non-revolving credit will take a hit from the expiration of cash-for-clunkers in August.

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

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

2009 Release Schedule

Released On: 1/8 2/6 3/6 4/7 5/7 6/5 7/8 8/7 9/8 10/7 11/6 12/7

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