The monthly data supplied by the Federal Reserve today shows that in November credit balances being carried by consumers dropped by $7.9 Billion, this drop is the largest on record. The total amount of credit being carried by consumers is $2.6 Trillion.
This data has two meanings, first is that it shows that credit is drying up for the consumers. The second is it reveals that consumers are reducing their use of credit which is a good thing for people. But for the economy it is bad because it indicates that consumer spending continues to shrink.
I expect to see the monthly consumer credit data to decline much further during 2009.
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Out of curiosity, can this number includes writeoffs by bank / creditors as well??????
Richard..
No, this data is collected by the Federal Reserve every month by conducting surveys of commercial banks. They collect data on how much revolving and nonrevolving credit is being currently held by their customers. This data is independent of what the banks are holding themselves.
thanks.