Consumer credit declined at an annual rate of 1.8% in July after a 0.5% drop in June. Consumer borrowing has fallen each month since August 2008, with the exception of three monthly gains. The historically strong positive correlation with consumer credit appears to be weakening (see chart 1) in recent months. This implies that current income is probably the sole support of consumer spending. Going forward, projections of tepid growth in employment and income suggest that consumer spending will show a muted trend in the near term. 
Housing Market Update - Mortgage Purchase Application Index Moves Up
The Mortgage Banker Purchase Index rose 6.3% to 184.5 during the week ended September 3. This weekly increase is the largest since June 11 (see chart 2). It is premature to declare that this may be the beginning of self-sustained growth in the housing sector. At the same time, the boom in refinancing posted a pause with the Refinance Index slipping 3.1% to 4926.5, after a string of four strong monthly gains. 
