Consumer Credit

Consumer credit represents loans to households for financing consumer purchases of goods and services and for refinancing existing consumer debt. The main categories of consumer credit are: auto loans, revolving credit, and other. Auto loans comprise 33% of total consumer credit and revolving loans comprise 42%. Loans secured by real estate are not included (See Mortgage Applications Survey). Monthly data on consumer installment credit is based on monthly surveys of a sample of commercial banks, consumer finance companies, credit unions, and retail sales. Changes in consumer credit indicate the state of consumer finances and suggest future spending patterns. Rising levels of consumer credit generally result from an increase in consumer demand. Because other more timely leading indicators for consumer spending are available, such as consumer confidence and weekly retail sales indices, financial markets do not respond much to this report. One problem with this indicator is that it measures outstanding loans only; it does not distinguish between new lending and existing loans. An increase in consumer credit could mean fewer old loans are being paid off while few, if any, new loans are being extended. Thus, this statistic must be interpreted with other aspects of the economy's performance in mind. Consumer credit is scheduled for release at 2:00 (CST) every month by the Federal Reserve Board.

POTENTIAL IMPACT ON INTEREST RATES: LOW