|Consumer Credit - M/M change||$15.0B||$11.0B to $18.0B||$15.2B||$8.8B||$10.9B|
Consumer credit rose a nearly as-expected $15.2 billion in February with January revised $2.1 billion higher to $10.9 billion. Revolving credit perked up with a $2.9 billion gain following January's $2.6 billion decline. Nonrevolving credit, which includes vehicle financing and also student loans, rose $12.3 billion which is on the slow side for this reading. Credit growth isn't robust but is steady and constructive for the economy.
Market Consensus Before Announcement
Consumer credit is expected to rise $15.0 billion in February following January's modest $8.8 billion gain. Credit growth has been slowing which hints at economic slowing. Consumers held back on credit-card borrowing in January as revolving credit fell $3.8 billion for the first monthly decline since February last year and the largest since December 2012.
The dollar value of consumer installment credit outstanding. Changes in consumer credit indicate the state of consumer finances and portend future spending patterns.
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.
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