Friday, August 7, 2009
Consumers Have Little Credit to Purchase Anything but Necessities Let Alone Lead a Recovery
June consumer credit down for 5th straight month
(MarketWatch) -U.S. consumers reduced their debt in June for the fifth consecutive month, the Federal Reserve reported Friday. Total seasonally adjusted consumer debt fell $10.29 billion, or at a 4.9% annual rate, in June to $2.502 trillion. Consumer credit fell in eight of the past nine months. Economists surveyed by MarketWatch expected consumer credit to decline by $4.5 billion. This is the longest string of declines in credit since 1991. In the subcategories, credit-card debt fell $5.04 billion, or 3.8%, to $1.59 trillion. This is the record 10th straight monthly drop in credit card debt. Non-revolving credit, such as auto loans, personal loans and student loans fell $5.04 billion or 3.8% to $1.59 trillion.
*is the recession really over? Economists disagree. I for one am very concerned about frenetics. People follow herd mentality ALWAYS due to sheer GREED. They don't pay attention to fundamentals (which are bad all the way around). What's important about consumer credit tightening is that it is those same consumers who MUST have money to BUY BUY BUY just about everything. 9.4% unemployment is really BAD. It means consumers have no money and the stock market hyjinks will continue to suck unsuspecting fools like us.
So please remember that this is a MAJOR headfake. They can run this market all the way to 10000 on such light volume. That is what they did in 2008 and again after Obama's election, only to COLLAPSE under it's own weight.
Don't get me wrong, less spending on credit is or should be the wave of the future. However, the stock market rally and housing and tech booms and commodity booms were mainly due to LOOSE credit to consumers. China is doing same thing right now TODAY, and they and those of us who actually do look at fundamentals, are VERY worried about it.
So CASH is king if you still have any leftover, for the REST of your life.