Consumer credit at 3PM

So the next economic number that may put a wrench in the market is the Consumer Credit number released at 3pm Wednesday. Survey numbers say -8.5 Billion with prior month -15.7 Billion...Will this move us for the close, short answer is YES---market pros will use "any" excuse to trade the news....

Also big news today is Alcoa earnings-always big but for some reason everyone is jumping all over their earnings as a was to tell ALL future earnings for the quarter. Kind of dumb but true.

Below is a quick note from my firm on Consumer Credit:

Total consumer credit balances are shrinking at an aggressive pace. According to the Federal
Reserve, a majority of banks are still tightening their lending standards for consumer loans
and credit cards. Meanwhile, consumer spending is slipping again after an unexpected increase
earlier in the year.
Revolving credit balances are falling at a steadily increasing rate. Consumer spending has slipped in
recent months, although it is still holding up much better than it was in late 2008. Consumers also have
more cash to work with thanks to several months of greater savings, increased transfer payments from
the government, and payroll tax credits. These factors have lessened the need for credit cards, while
consumers also try to dig themselves out of debt.
Non-revolving credit balances are also shrinking, but the recent rate of decline has been slower and
steadier than it has for revolving credit. New vehicle sales remain extremely weak but seem to have
found a floor at an annualized sales rate of about 9 million units. Demand for new non-revolving lines of
credit is very weak, while current borrowers are steadily paying off their existing balances. Consumer
delinquency rates for auto loans remain much lower than they are for other types of credit.
Total consumer credit balances are expected to gradually decline over the months ahead. In particular,
revolving credit balances will fall steadily as consumers hold more cash and look to reduce their debt.
Consumers are not expected to significantly increase spending or their demand for credit until the labor
market begins to firm up in 2010 or beyond. On the upside, reducing credit utilization during this severe
recession will help consumers avoid a longer-term decline in credit quality.

posted by Peter Greene