Posts filed under “Credit”

Consumer Debt & Spending

This week, the Federal Reserve reported that revolving
consumer credit had risen 7.4% from the same  period last year. Outstanding credit card debt hit $937.5 billion.

Floyd Norris notes the significance of the recent trends in credit card indebtedness:

credit card debt is growing at the fastest rate in years, a fact that
may signal coming trouble for the banks that issue them…

The annual growth rate has now been over 7 percent for three months
running, the first such stretch since 2001, when a recession was
driving up borrowing by hard-pressed consumers.

The surge in credit card borrowing comes as credit card default
rates are gradually rising, albeit from low levels, and may reflect the
fact that it has become harder for consumers to borrow against the
value of their homes, both because home values have fallen in many
markets and because mortgage lending standards have tightened."

The chart tells all:
click for larger chart

graphic courtesy of NYT

With that as our context, consider these two headlines:

Economy Hit As Consumers Tighten Belts

U.S. Will Escape Recession, Economists Say in Survey (Bloomberg) 

While its possible they can both be right — slowing consumer brings growth down to marginally positive, but not recessionary — I have a sneaking suspicion they both won’t be right.

Which one do you think will be correct . . . ?


How Good Were Holiday Sales Really?

Real Holiday Spending Was Negative in 2007

Some Debt Trends Are Good. This Isn’t One of Them.
NYT, January 12, 2008

Economy Hit As Consumers Tighten Belts    
WSJ, January 12, 2008; Page A1

U.S. Will Escape Recession, Economists Say in Survey
Shobhana Chandra and Alex Tanzi
Bloomberg, Jan. 9 2007

Category: Consumer Spending, Credit, Economy, Retail

Mozilo Exit Payday: $110 Million Dollars

Category: Corporate Management, Credit, Derivatives, Real Estate

The Danger from Bear Stearns New CEO

Category: Corporate Management, Credit, Derivatives, Psychology

Merrill vs Bear: Two Contestants, No Winners

Category: Corporate Management, Credit, Derivatives

Quote of the Day: How Banks Lose Money

Category: Corporate Management, Credit, Derivatives, Finance

The Credit Crunch, as told by Dr. Suess

Category: Credit, Derivatives

Dollar Value Inventory of Unsold Homes

Category: Credit, Real Estate, Technical Analysis

The Making of a Mortgage CDO

Category: Credit, Derivatives, Real Estate

Shiller: Single-family Housing Market is “Grim”

Category: Credit, Real Estate

Not a Creature was Stirring . . .

Category: Credit, Real Estate