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Thursday, November 8, 2007

Consumer Credit Dies A Little...

Consumer Credit: Consumer credit died last month… and it will only get worse going forward.

“Consumer credit increased at an annual rate of 5-1/4 percent in the third quarter of 2007. In September, consumer credit increased at an annual rate of 1-3/4 percent.”

Lets take a closer look:

The percentage annual rate of change of total consumer credit dropped from 7.5% in August to 1.8% in September. The rate of change in revolving credit, such as credit cards, dropped from 9.3% to 4.4%. Non-revolving credit, such as car loans, dropped from 6.4% to 0.3%.

Now that MEW is no longer a possibility, the recent spike in credit card usage was the next logical step in a desperate cycle. Yesterday’s data suggests that now credit card balances are slamming up against their limits and that consumers have maxed out their credit sources. They are starting to see ‘declined’.

It won’t be long before they start seeing ‘past due’ and ‘final notice’ on their statements.