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Banking, finance, and taxes

Credit to Americans Still Declining (V, MA)

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By Douglas A. McIntyre Updated Published
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Unemployment may be improving or getting less bad, but the same is not true for credit and borrowing by consumers if the June trends continue.   The consumer credit report for June has just come out, and there was another decline and revision lower for May.  Outstanding credit fell by an annualized rate of 4.9% to right at $2.503 trillion.  The Federal Reserve data shows that consumers are still holding pat and  continue to deleverage their own finances.

After looking at various estimates from Bloomberg and Dow Jones, we were looking for nearly a $4 billion decline in this report.  But the $10.3 billion drop in credit was much wider than expected and the reading from May was adjusted down to a drop of $5.4 billion from the preliminary figure of a drop of $3.2 billion.

If we read through the data history, this is the worst credit trend since the early 1990’s.  Revolving credit (credit card use) fell by almost 7% or $5.3 billion in June to $917.0 billion.  That also marker a record 10th consecutive drop.  Revolving credit was down another $4.9 billion in May.

Non-revolving credit measuring automobile and mobile homes and other issues fell by almost 4% or $5.0 billion to $1.586 trillion.  That same figure was a drop of 0.4% or $506 million in May.

Visa Inc. (NYSE: V) is still up 0.6% at $69.09, but it did weaken a tad after the 3:00 report. Shares of MasterCard Incorporated (NYSE: MA) are up 1.5% at $204.60, but the stock was above $205.00 before this.

The takeaway here is that this may be a moot point.  The jobs data this morning and other data this week is from July retail sales and more and we are now in August.  With this being a June report, traders are effectively under the mindset that this might just be noise.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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