From Bloomberg - Data source: Haver AnalyticsConsumer Credit
Released on 9/8/2009 3:00:00 PM For July, 2009
Released on 9/8/2009 3:00:00 PM For July, 2009
Consumer Credit - M/M change
Prior $-10.3 B
Consensus $-4.0 B
Consensus Range $-7.0 B to $-2.5 B
Actual $-21.6 B
Highlights: Contraction in consumer credit reflects rising consumer caution as well as banking efforts to limit lending exposure. Consumer credit contracted $21.6 billion in July, a very severe reading and the largest on record. At $15.5 billion, June's contraction was also severe ($10.3 billion initially reported). July's contraction is the sixth in a row for the longest streak since the credit squeeze of 1991. Nonrevolving credit led the decline, at minus $15.4 billion in a surprise given cash-for-clunkers which kicked off late that month. It would be a big surprise if there was another deep contraction in non-revolving during August. Revolving credit in July fell $6.1 billion. The markets may ignore this report but policy makers won't as it works directly against their efforts to stimulate spending.
Market Consensus Before Announcement: Consumer credit outstanding in June contracted $10.3 billion, evenly split between revolving, down $5.3 billion, and non-revolving, down $5.0 billion. Consumer credit contracted at an annual rate of $5.2 billion in the second quarter, more severe than the $3.6 billion rate of contraction of the first quarter. Without a doubt this report paints a picture of the consumer in hunker down mode. Banks have been cutting down on credit limits while consumers, hit by job loss or the fear of job loss, have been paying down credit card balances. These are not good news for policy makers who are trying to stimulate spending.
Definition: The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.
Prior $-10.3 B
Consensus $-4.0 B
Consensus Range $-7.0 B to $-2.5 B
Actual $-21.6 B
Highlights: Contraction in consumer credit reflects rising consumer caution as well as banking efforts to limit lending exposure. Consumer credit contracted $21.6 billion in July, a very severe reading and the largest on record. At $15.5 billion, June's contraction was also severe ($10.3 billion initially reported). July's contraction is the sixth in a row for the longest streak since the credit squeeze of 1991. Nonrevolving credit led the decline, at minus $15.4 billion in a surprise given cash-for-clunkers which kicked off late that month. It would be a big surprise if there was another deep contraction in non-revolving during August. Revolving credit in July fell $6.1 billion. The markets may ignore this report but policy makers won't as it works directly against their efforts to stimulate spending.
Market Consensus Before Announcement: Consumer credit outstanding in June contracted $10.3 billion, evenly split between revolving, down $5.3 billion, and non-revolving, down $5.0 billion. Consumer credit contracted at an annual rate of $5.2 billion in the second quarter, more severe than the $3.6 billion rate of contraction of the first quarter. Without a doubt this report paints a picture of the consumer in hunker down mode. Banks have been cutting down on credit limits while consumers, hit by job loss or the fear of job loss, have been paying down credit card balances. These are not good news for policy makers who are trying to stimulate spending.
Definition: The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.
Comments:
This report is a disaster.
The consensus was a $4 billion contraction in credit, but the report delivered a contraction over Five Times as large at $22 billion!
Clearly this is a sign of deflation with such an enormous contraction in credit.
My question is: Why is this being ignored?
Surely this is not a sign of recovery and the stock market will at some point roll over as reality sets in.
Once the full extent of the Non-recovery is realized, I expect that gold in particular will benefit as a race to find a safe haven accelerates.
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