Consumer Credit

The Consumer Credit number is released monthly and measures the change in the value of outstanding consumer credit that requires installment payments.  It is supposed to be a measure of consumer spending and the willingness of lenders feel comfortable issuing loans.  On the consumer side, psychologically it shows that the consumer feels confident in the economy and is willing to spend instead of saving.  The September 8th report covers the month of July 2010.  The number was forecast to come in at -4.2B and actually came in at -3.6B, which was better than expected.

So what does this mean?  Well it means that consumers are pulling back on spending and trying to pay down debt.  It also reflects the banks willingness to lend money.  This is not a surprise due to the negative environment in the economy.  In the U.S. economy, this is a bad thing as our economy is consumer and credit driven.  Again, this was viewed as good as it came under forecast so markets seemed unaffected by this negative data.