Consumer credit rose at a 6.4% annual rate, or $12.9 bil, to $2.441 tril, after a $2.3 bil gain in April. Credit-card and other revolving debt jumped by $7.2 bil, evidence that Americans are still willing to borrow to spend. The 9.8% rate was the best in 6 months. Auto and other nonrevolving loans grew by $5.7 bil.
Retail spending is a huge wild card right now. I posted this chart from Martin Capital a few days ago, but it deserves a second look. Notice that
1.) Housing sales have been dropping since 2005,
2.) Car sales have been dropping since the beginning of the year and
3.) Year over year retail sales have been declining since the beginning of 2006.
Let's call housing a lost cause for the foreseeable future, largely because of the massive inventory overhang. That means a pick-up in the YOY numbers will have to come from cars and retail sales. Note the YOY retail sales numbers have been increasing since the beginning of the year and the car sales are at the low end of a range that has lasted since the beginning of 2001. According to Barron's Pulse of the Economy Section the YOY change in auto sales is 4.31% for domestic cars, 7.16% for imports, 2.27% for domestic trucks and 7.32% for import trucks. In other words, sales are fair for domestic companies but good for foreign autos.
That means we need to keep a close eye on retailers this earnings season to see how their earnings are shaking out.