Retailer Daily

Consumer Credit Falls 1.5% in May

Consumer credit decreased at a seasonally adjusted annual rate of 1.5% in May 2009, according to the Federal Reserve. This represented a $3.2 billion drop from $2.522 trillion in April to $2.519 trillion in May. Revolving credit, which mostly consists of credit card debt, fell 3.7%, from almost $931 billion to $928 billion. Non-revolving credit, which consists of loans and financing, fell 0.3%, from $1.592 trillion to $1.591 trillion. Other financial indicators also suggest U.S. consumers are pulling back on their purse strings. Seasonally adjusted Federal Reserve borrowing figures for April 2009 show that U.S. consumers decreased borrowing by 16%, from almost $794 billion to approximately $783 billion. In addition, during May 2009, U.S. consumers saved significantly more money than they did in April 2009, but also earned and spent a little more. According to the Bureau of Economic Analysis, in May, consumers saved $768.8 billion, a 26.3% increase from the $608.5 billion saved in April. Personal saving as a percentage of disposable income was 6.9% in May, compared with 5.6% in April. Similar jumps in total personal saving figures and percentages occurred between March and April 2009. Consumers’ personal consumption expenditures, which essentially reflect consumer spending, also increased in May. However, the increase was only $25.1 billion, or 0.3%. Other economic indicators remain mixed. Growth of the national trade deficit dropped by roughly 50% between March and April 2009, and U.S. retail and food services sales in May 2009 climbed 0.5%. However, the U.S. unemployment rate rose from 9.4% in May to 9.5% in June. In addition, the Consumer Confidence Index fell from 54.8 in May to 49.3 in June. In another negative economic sign, the RPI (Restaurant Performance Index) slid from 98.6 in April 2009 to 98.3 in May 2009, registering its first decline since December 2008.