Credit extended to consumers in the US declined for the 7th month by $12 billion, above the ten billion decline economists had forecast. Offsetting the worse-than-expected reading was an upward revision to the July release to a fall of $19 billion from $21.6 billion. Total credit is now at the lowest in more than two years as the revolving segment fell sharply by nearly ten billion while nonrevolving credit saw a decrease of just over two billion. Also of note were car loans, which posted a considerable decline to $24.4B from $28.9B, even as the cash-for-clunkers program continued to buoy the automotive market. Despite the weakness evident in seasonally adjusted data, signs of improvement are appearing as commercial banks raised revolving credit for the first time since May. Ultimately, declines signal retrenchment by firms, as well as changing patterns in consumer spending habits. It may take many more months before the figure returns to growth, however remains a clear macro sign of economic conditions.
Reaction to the release has been minimal as the decline came as little surprise to analysts surveyed. Stocks in the US remain down marginally, while crude is down nearly two percent on a rise in weekly gasoline stockpiles earlier in the week. Dollar strength continues to mark the session as well, following on considerable weakness in recent days as the RBA rate increase lifted risk appetite.
[B]Consumer Credit Historical Chart[/B]
