Consumer credit outstanding – think credit card debt and auto loans – tumbled a seasonally adjusted annual rate of 10.4 per cent to $2,472bn, the Federal Reserve said on Tuesday.
Revolving credit decreased at an annual rate of 8 per cent, and non-revolving credit decreased at an annual rate of 11.75 per cent.
Here’s a snapshot of the release (click to enlarge):
The $21.6bn drop in borrowing was a record, and significantly steeper than consensus expectations of a $3.5bn-$4bn decline.
Borrowing in June fell $15.5bn, revised down from $10.3bn. July’s decline makes it six months in a row that consumer credit has fallen – the first time this has happened since at least 1991.
As US consumers remember what it’s like to live within their means, can continued weakness in retail sales (and further pain for the sector) be anything but a given?
Related links:
The shape of things to come is probably not ‘V‘ – FT Alphaville
The deleveraging process is inevitable – FT Economists’ Forum (July 2009)
Consumer deleveraging datapoint of the day – Felix Salmon / Reuters