Consumer Credit Shows Very Surprising Drop For July
Consumer Credit is going the wrong way. In the month of July we saw a contraction by $3.28 billion. For the month of June, Consumer Credit was revised to up by about $11.8 billion from a prior report showing that the gain was $6.46 billion.
The report from the Federal Reserve is hardly a market moving event on most days, but this report matters today. Here is why: this was the first time we saw a net contraction in about a year. This is a 1.45% annualized rate. Not the end of the world, but not a good sign when so many economists are extremely mindful of the risk of recession coming back to the United States.
To show just how bad this report, Dow Jones was calling for credit to expand by about $7 billion. Bloomberg was calling for an even higher reading of a $9.8 billion expansion in credit.
The bulk of the drop was due to revolving credit, which is effectively credit card debt by consumers. This showed a contraction of over $4.8 billion or -6.8%. It is conceivable that this will be a negative for retail, but we have already seen many of the retail reports for the same period and even some newer data.
JON C. OGG
Filed under: 24/7 Wall St. Wire, Banking & Finance, Consumer Goods, Consumer Product, Economy