This may seem like a lot, but there was a revision in January to higher credit and even a lower drop in December, and this sort of makes the reading a wash today. January’s consumer credit was revised to a gain of $8.1 billion rather than a $1.8 billion rise originally reported; and December’s consumer credit fell by -$5.6 billion instead of -$7.5 billion.
The numbers ahead may be grossly different now that the TALF has just started to kick in. This is also direct consumer credit rather than credit toward housing and borrowings against housing, but those markets are quiet right now. Interestingly enough, non-revolving credit (including car loans) rose by 0.2% to $1.608 trillion. The big drop was from credit cards in the revolving credit side and that fell by $7.8 billion to $855.7 billion.
The consumer credit numbers are definitely watched by traders who watch MasterCard Incorporated (NYSE: MA) and Visa, Inc. (NYSE: V). Both stocks are down over 2% today with the sell-off seen in the broad market.
This notion probably gives a bit more ammo to those who have been harping on banks for cutting credit and reducing credit lines. It also plays into the most recent Meredith Whitney call of banks and credit being cut.
This is good news for those who want the public to work on spending less and saving more. Unfortunately, that isn’t the case if you are a retailer who deals in high volumes of transactions.
JON C. OGG
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