May Consumer Credit fell $3.2b to $2.519 trillion (SA) but $5.6b less than anticipated. Consumer credit outstanding is now at the lowest level since Dec ’07 and May is the 8th month in the past 9 that has seen a decline. Most of the decline was in revolving credit which fell $2.9b while non revolving credit outstanding fell by $400mm. With respect to current economic activity, less credit use equates with less spending whether its due to rising unemployment, cut credit lines, or consumers wanting to pay down debt BUT deleveraging is desperately needed in order to put this country back on a firmer foundation and no government policy is going to stop the deleveraging freight train at this point. Also of note, Obama signed the credit card ‘reform’ bill on May 22nd and today’s data won’t reflect what changes to credit availability may follow.
