U.S. Consumer Credit Fell 5th Straight Month in June

Source: Bloomberg

By Vincent Del Giudice

Aug. 7 (Bloomberg) -- Consumer credit in the U.S. declined in June for a fifth straight month as banks maintained tough lending terms and households remained reluctant to borrow money for major purchases.

Consumer credit fell $10.3 billion, or 4.92 percent at an annual rate, to $2.5 trillion, according to a Federal Reserve report released today in Washington. Credit dropped by $5.38 billion in May, more than previously estimated. The series of declines is the longest since 1991.

Stagnant wages and falling home values mean consumer spending, about 70 percent of the economy, will take time to recover even as the recession eases. Incomes fell the most in four years in June as one-time transfer payments from the Obama administration’s stimulus plan dried up, and Americans saved almost $125 billion more of their incomes in June than a year earlier.

“This string of declining credit should continue as long as the economy eliminates workers at an elevated pace,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “We’re 20 months into the recession and the economy is still losing a quarter-of-a-million jobs per month.”

Economists had forecast consumer credit would drop $5 billion in June, according to the median of 33 estimates in a Bloomberg News survey. Projections ranged from declines of $11.9 billion to $1 billion. The Fed initially reported that consumer credit decreased by $3.2 billion in May.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aQMezopEEsH8

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We -- (completely involuntarily) gave banks trillions of tax-payer dollars so that they would survive and extend credit to citizens. Banks -- are laughing at us.

becoming wise to the banks.

Consumer Spending Up Second Straight Month

Those 30% interest rates are probably the deal breaker.

What are the credit card companies going to do when the CCRA takes effect in February if some consumers refuse to borrow?

As in, order them to lend and say "We're not asking anymore".

Viola.

... look for inflation ... big time.

who still have jobs are scrambling like hell to get their debts paid off. I know I am!

The worst time to be in debt is when the economy tumbles.

I saw the handwriting on the wall when Bush rammed that bankruptcy bill through. I knew there was a reason.

Most of the foreclosed houses on our block are now occupied, so that's a positive sign too.