I admit to a degree of dull predictability; Iprefer to call it reliability. In any case, if it’s a few businessdays after the start of the month, it’s time to comment again onthe Federal Reserve’s G19 statistics on revolving consumer credit(i.e. mostly credit card borrowing).
In fact, more of the same is indeed the story-a kind of negativesameness that does warrant discussion. After turning in twoconsecutive months of growth in outstandings (May and June) whichactually netted a barely positive Q2 (+1.6 percent annualized), thetide has shifted. Three quarters of positive growth appears to betoo high a bar for today’s consumer economy, and July dropped apreliminary -5.2 percent (annualized rate). At the end of July,revolving credit outstanding was down $7.7 billion for the year.Consumer deleveraging continues.
It’s a bit like watching the equity markets. After so muchvolatility, the daily media chant centers around “Are we positivefor the year again/yet?” Indeed, the equity market parallel islikely real; the markets are a sort of consumer sentiment barometertoo. And both the markets and consumer revolving borrowing areflashing caution; we are not yet in positive territory. Mercator’sCustomerMonitor Survey Series data for 2011 indicates continuedconsumer caution this year, with a substantial proportion ofconsumers continuing to note that they would rather pay now thanpay later.
It’s going to take three positive months in a row to get meexcited.
