Sharpest Drop in Consumer Credit in 15 Years

Includes: AXP, MA
by: Abbi Adest

Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

U.S. Consumer Credit Down by Most Since April 1992 []

Summary: September's outstanding consumer credit, which excludes mortgage debt, fell by $1.20 billion in September, to $2.366 trillion, at a seasonally adjusted annual rate of 0.61%. These results were the sharpest drop since April 1992, when outstanding consumer credit fell by $1.78 billion. Wall Street economists were not expecting these results; most were expecting a growth of about $5 billion in outstanding credit. Much of the decline is pinned on nonrevolving credit such as car and boat loans- an indication of a slowdown in car sales. Nonrevolving credit fell by $4.05 billion or 3.21% to $1.50 billion. However, credit card balances or so-called revolving debt, rose at a rate of 4%. It can be surmised that as housing prices fall, it has become harder for Americans to borrow against their homes in order to raise cash for other expenses. Instead, people have been relying more heavily on credit cards.
Related links: Additional coverage: WSJForbes
Potentially impacted stocks and ETFs: American Express (NYSE:AXP), Bank of America Corp (NYSE:BAC), Citigroup (NYSE:C), Mastercard (NYSE:MA) • ETFs: iShares Dow Jones U.S. Financial Services Index (NYSEARCA:IYG), Vanguard Financials ETF (NYSEARCA:VFH)

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