PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Latest Consumer Credit Data Reflects Consumer Strength

By at 9 January, 2019, 12:20 pm

Small Business Insider

by Raymond J. Keating-

While measures of consumer confidence are worth factoring into assessments on the economy, data on consumer actions is what matters. The same, of course, can be said of surveys about what business owners and executives say they are going to do regarding investment versus the actual investment numbers.

SBE Council recently noted positives regarding retail sales in October and November. That data was further confirmed with the Federal Reserve’s latest release on January 8th regarding consumer credit (i.e., most credit extended to individuals, excluding loans secured by real estate).

Consumer credit (at a seasonally adjusted, annual rate) increased strongly in both October (+7.6 percent) and November (+6.7 percent).

That included solid increases in revolving credit (mainly credit cards) – up 10.9 percent in October and 5.5 percent in November – and nonrevolving credit – rising by 6.5 percent in October and 7.1 percent in November.

Of course, there’s always a balance when it comes to debt, namely, while increasing consumer credit reflects increased confidence among consumers, one does not want to see an excess level of debt eventually hamper individuals, families, small businesses and the economy. But figuring out what’s excessive is a rather tricky, highly subjective undertaking.

For now, the one thing that can be said without hesitation is that solid consumer confidence has been reflected in the latest data on retail sales and consumer credit.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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