US: Consumer Credit


Fri Jun 05 14:00:00 CDT 2015

Consensus Consensus Range Actual Previous Revised
Consumer Credit - M/M change $16.5B $14.0B to $22.5B $20.5B $20.5B $21.3B

Highlights
Consumer borrowing is showing very solid life, up $20.5 billion in April following an upward revised gain of $21.3 billion in March. The key for this report is a second big gain in revolving credit which is the component where credit cards are tracked. This component rose $8.6 billion following March's gain of $4.9 billion. These are unusually strong gains for this reading and point squarely at rising consumer confidence. Nonrevolving credit rose $11.9 billion in the month reflecting vehicle financing and another rise in student loans.

Market Consensus Before Announcement
Consumer credit is expected to rise an intrend $16.5 billion in April. Gains in this report have been consistently centered in non-revolving credit, offsetting long-term weakness in the revolving credit component which is where credit card debt is tracked.

Definition
The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.



Description
Growth in consumer credit can hold positive or negative implications for the economy and markets. Economic activity is stimulated when consumers borrow within their means to buy cars and other major purchases. On the other hand, if consumers pile up too much debt relative to their income levels, they may have to stop spending on new goods and services just to pay off old debts. That could put a big dent in economic growth.

The demand for credit also has a direct bearing on interest rates. If the demand to borrow money exceeds the supply of willing lenders, interest rates rise. If credit demand falls and many willing lenders are fighting for customers, they may offer lower interest rates to attract business.

Financial market players focus less attention on this indicator because it is reported with a long lag relative to other consumer information. Long term investors who do pay attention to this report will have a greater understanding of consumer spending ability. This will give them a lead on investment alternatives. Also, during times of distress in credit markets, consumer credit can give an idea about how willing banks are to lend.