US consumer credit in May expanded by $22.35 billion, the smallest since January, after rising by a downwardly revised $36.76 billion in April, the Federal Reserve said on Friday. Analysts were way off on these numbers. Reuters polls had them expecting consumer credit to climb $31.90 billion after a previously reported $38.07 billion advance in April. With consumer sentiment at the lowest ever and inflation at 40 year high we are seeing consumer ‘retrained’ after two years of lockdown not willing to get into unnecessary debt in mass like in previous credit cycles.

- Blue: Percent change of total consumer credit, seasonally adjusted at an annual rate
- Purple: Percent change of total revolving consumer credit, seasonally adjusted at an annual rate
Consumers reported a stunning loss of confidence in June the preliminary University of Michigan Index of Consumer Sentiment showed. The index in June dropped to 50.2 (consensus 59.0) from the final reading of 58.4 for May.
Revolving credit, which mostly measures credit-card usage, rose only by $7.419 billion after increasing $17.96 billion in the prior month.
Nonrevolving credit, which includes auto loans as well as student loans made by the government, increased by $14.93 billion in May. That followed a $18.80 billion rise in April.
Inflation Means Choices Being Made
“As the price of food continues to climb with the Fourth of July approaching, Jayne Crucius had to decide whether she would grill her traditional beef tenderloin. When Ms. Crucius saw that a five-pound beef tenderloin would set her back about $135, she decided to skip it. Instead, she’s serving chicken and pork ribs at a Fourth of July party… The average cost of a summer cookout for 10 people this year is $69.68, a 17% increase from last year, according to a survey from the American Farm Bureau Federation…” July 2 – Wall Street Journal (Joseph De Avila)
“Sticker shock in the US car market is hitting new extremes, with some Americans now looking at higher monthly auto payments than what they typically pay in rent. A record share of new car shoppers are being saddled with monthly payments topping $1,000, according… Edmunds. That’s higher than the average cost of rent in 24 US metro areas on the Zumper National Rent Report… A new poll from Monmouth University showed 42% of Americans say they are struggling to remain where they are financially.” July 6 – Bloomberg (Martine Paris):
Source: Federal Reserve
From The TradersCommunity News Desk