Martin Weiss Safe Money Report    
About WeissSafe Money ProductsOur Service GuaranteeHow to Contact Us    
Subscribers Enter Here

Risk Reports
About Our Staff
Sample Issue
Investment Tools
Favorite Links
Glossary and FAQs
Safe Money Report

September 13, 2000

Consumer-Debt Growth Moderated in July
By Henry J. Pulizzi, Dow Jones Newswires

The Growth Rate Moderated, But Consumers Are Still Drowning In A Sea Of Debt ... Weiss comments

WASHINGTON - Americans took on less consumer debt in July than in June, another sign that household spending continues to moderate.

The Federal Reserve said Friday that consumer credit expanded a seasonally adjusted $9.4 billion in July, rising at a 7.7% annual rate, the smallest increase since April.

The July gain compares with June's revised rise of $14.7 billion, previously estimated at $12 billion, and was below the six-month moving average of $11.9 billion.

'Evidence is that spending is slower, and survey data shows demand for credit has shifted down at the same time lenders are a bit more cautious,' said Geoffrey Somes, an economist at FleetBoston Financial. 'Thus, we expect a marked slowing in credit growth in coming months.'

That fits into the soft landing scenario many economists are forecasting for 2001. Financial markets now expect the Federal Reserve to leave interest rates unchanged through the remainder of 2000 as productivity gains continue to offset the threat of inflation.

Revolving credit, which includes credit card, retail and bank-card borrowing, rose an adjusted $3.8 billion in July, after rising $5.7 billion the month before.

Non-revolving credit - loans extended for cars, education, vacations and mobile homes, also moderated, rising by $5.7 billion in July, or at an 8.2% annual rate. In June, non-revolving credit expanded $9.0 billion, or at a 13.2% yearly pace.

At the end of July, consumer installment debt totaled $1.464 trillion, up 0.7% from a month earlier.

Even though the pace at which consumers whip out their plastic has slowed this month, it has not subsided. Consumers continue to pile on credit card and other debt - the additional $9.4 billion has brought outstanding consumer debt to a whopping $1.46 trillion. Not only is this an increase from the month before, consumer debt has risen every month since November of 1997. Since then, consumers have tacked on an average of $7.6 billion in debt every month. The interest rate hikes of the past year have done little to curb the appetite of the U.S. consumer. Don't bet on the Fed to cut interest rates so that consumers can spend even more.
Subscribers: Check the latest
Weiss Stock Risk Ratings
before you make your next move!

Non-subscribers: Register Here for three free Weiss Stock Risk Ratings Reports

Sign-up to get SMR's News and Views Commentary emailed directly to you!

Home | Current Issue | Investment Tools | Risk Ratings
About Our Staff | Sample Issue | Testimonials

® 2001 Weiss Incorporated
4176 Burns Road, Palm Beach, FL 20005
tel: (561) 627-3300 - fax: (561) 625-6685