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Friday, March 06, 2009

Consumer Credit

by Calculated Risk on 3/06/2009 03:06:00 PM

Consumer credit tends to lag the economy, so I don't follow it very closely.

The Fed reported on Consumer Credit for January:

Consumer credit increased at an annual rate of 3/4 percent in January 2009. Revolving credit increased at an annual rate of 1-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent.
The small increase in January followed three months of sharp declines.

Consumer Credit Click on graph for larger image.

This graph shows the 3-month change (to remove noise) in consumer credit on an annual basis.

This suggests that consumer credit tends to lag the economy.

The current decline in consumer credit isn't as sharp as in the mid'70s and early '80s, probably because in recent years consumers relied more on their homes for borrowing (with HELOCs and cash out mortgage refi's), instead of their credit cards or other consumer credit. Of course there is still time for further declines.