Consumer credit dropped 5.2%

Consensus	Actual	Previous
$-4.0 Billion	$-11.1B	$-8.1B

• Consumer credit fell again as consumers put away their credit card and hoarded cash. 
• This was close to 3x more than consensus.
• But personal savings rate rose to 4.2% making it the first time in a decade that savings rate rose above 4%.
• Non-Revolving credit fell $5.7 billion or 4.2% to $1.6 trillion
• Revolving credit  fell $5.4 billion or 6.8% to $946 billion. 
• Households have been spending less and saving more as they seek to replenish nest eggs on top of job insecurity.
• Consumer spending accounts for 70% of the US GDP.  (Worrisome? YES)
• Total consumer credit is now $2.55 billion. 

Finally, something made sense again.  Consumers are actually deleveraging.  These numbers should not be surprising at all considering that Visa’s revenue was stronger from their debit transactions than credit transactions for the first time and MasterCard reported worst than expected earnings.  On top of that, comparable same-store sales showed that consumers are becoming more and more thrifty with their purchases looking for bargains where ever possible.  I believe this deleveraging process will take some time and but we may have seen a bottom in terms of consumption.  Consumers are just going to consume with less debt from now on.

Source: SeattleTimes, St. Louis Fed. & CNBC