Yesterday’s tragic events coupled with a slowdown by credit card holders, may tip the economy into a full blown recession. For the first time in nine years overall consumer credit failed to grow in two consecutive months and for the first time in four years overall consumer borrowing decline. Revolving credit, mostly credit card debt, remained flat during July. The news adds more evidence that the economy is in for some rough sailing during final months of this year. Strong consumer spending in the face of an abrupt business contraction has held off a full blown recession this year. However the situation is changing as unemployment rises and consumer economic concerns mount. According to preliminary figures released this week by the Federal Reserve, revolving debt remained flat at $700.3 billion during July. Non-revolving debt also remained flat at $888.9 billion. At the end of July, American consumers were $1.590 trillion in debt, exclusive of home mortgages.
REVOLVING CREDIT HISTORICAL ($billions) Jul01 Jun01 May01 Apr01 Mar01 Feb01 Jan01 %GRWTH: -0.1% 2.1 4.5 14.2 11.9 20.8 11.6 $OWED: $700.3 700.3 699.0 697.6 688.2 681.4 670.3 Dec00 Nov00 Oct00 Sep00 Aug00 Jul00 Jun00 %GRWTH: 5.0% 10.9 4.7% 7.8 12.6 6.7 11.2 $OWED: $663.4 660.6 654.8 649.3 645.1 638.2 634.7 Source: Federal Reserve; revised figures as of 08/10/01; For complete historical data visit www.carddata.com .