Sunday, September 12, 2010

USA Total Consumer Credit Decreases in July (Charts) *6th consecutive monthly decline*

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USA revolving credit in July decreased for 23rd consecutive month


USA Total Consumer Credit Decreases in July

The Federal Reserve reported the July USA consumer credit data on September 8 and stated, "In July, total consumer credit decreased at an annual rate of 1-3/4 percent. Revolving credit decreased at an annual rate of 6-1/4 percent, and nonrevolving credit increased at an annual rate of 1/2 percent."

USA total consumer credit decreased for the 6th consecutive month, the last monthly increase was January 2010. However, there had been eleven consecutive monthly decreases prior to January 2010. This was the 23rd consecutive monthly decline in revolving credit. The last monthly increase was in August 2008. Nonrevolving credit increased for the 3rd consecutive month, but the increases have not offset the revolving credit decreases.

As can be seen from the charts below of USA Total Consumer Credit, Total Revolving Credit, and Total  NonRevolving Credit, consumer debt peaked in July and August 2008 (The Great Credit Bubble) and has downtrended since. The decrease in revolving credit has been much greater than the decrease in nonrevolving credit. While reports say consumers are deleveraging, i.e. paying off their debt, it should also be noted that banks have tightened lending standards. Therefore, some consumers who could  have borrowed (and spent) as recently as the first half of 2008 cannot obtain credit in 2010. In addition, consumer uncertainty regarding the future plus the current high unemployment and underemployment rates have lowered loan demand. Since consumer spending, consumption is a significant portion  of the USA economy (60%+ of GDP), all of these factors slow down the USA economic (GDP) growth.

Below is a 68 month chart of USA Total Consumer Credit from December 2004 through the latest month reported, July 2010. Total Consumer Credit peaked in July 2008 at $2.582 trillion, began downtrending, and now is $2.419 trillion in July 2010. This is a -$162.99 billion, -6.33% decrease from the July 2008 peak to July 2010.



Below is a 68 month chart of USA Total Revolving Credit from December 2004 through the latest month reported, July 2010. Total Revolving Credit peaked in August 2008 at $973.6 billion, began downtrending, and now is $827.8 billion in July 2010. This is a -$145.8 billion, -14.976% decrease from  the August 2008 peak to July 2010.




Below is a 68 month chart of USA Total NonRevolving Credit from  December 2004 through the latest month reported, July 2010. Total NonRevolving Credit peaked in July 2008 at $1.609 trillion, decreased somewhat, leveled off, and now is $1.591 trillion. This is a -$18.25 billion, -1.14% decrease from the July 2008 peak to July 2010.




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