US Consumer Credit Preview: retail sales in view
|-
Newly acquired consumer debt is forecast to drop by a quarter in December
-
Four of the past six months have surpassed predictions
-
Early look at consumer spending in December, with retail sales delayed by the shutdown
The Federal Reserved will release its figures for consumer credit on Thursday February 7th at 3 pm EST, 20:00 GMT
Forecast
Outstanding consumer credit is predicted to increase by $17.0 billion in December, lower than the prior month's gain of $22.1 billion.
Consumer credit and consumption
Consumer credit in the United States is a major subset of overall consumption. Consumer credit, primarily in the form of revolving credit card debt is easy to obtain and many people maintain balances on several cards. It is used to both for ease and to supplement income. Overall retail sales do not differentiate between credit and cash purchases.
Credit extension has been rising since April. The three month moving average has increased from $6.743 billion in April to $18.923 in November. An increase in the last quarter of the year for holiday spending is standard.
Reuters
Revolving and non-revolving credit
The credit figures tracked by the Federal Reserve have two components, revolving and non-revolving debt.
Revolving debt is chiefly credit card debt. It has no fixed payment plan beyond a minimum payment each month to maintain the balance and usually a maximum outstanding limit.
Credit card debt rose $4.8 billion in November following October’s $9.3 billion gain.
Non-revolving debt is a loan with a fixed principal, term and interest. The majority in the Fed’s statistics are college and auto loans.
This category jumped $17.4 billion in November for the largest monthly increase since 2017. Student loans were at $1.564 trillion in November, car loans at $1.141 trillion both records.
Total outstanding consumer borrowing reached $3.979 trillion in November. Credit card debt was at $1.042 trillion in November and structured or non-revolving credit was at 2.937 trillion, both records.
Conclusion
The labor maket is exceptionally strong. Job creation, wages and participation rates are bouyant. It is likely that the realistic optimism of American consumers will be reflected on their December credit cards..
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.