The reports last week showed that in April there has been a precipitous slowing of revolving credit. It would have been better if we saw it slow at a more reasonable rate rather than what actually occurred. While that may seem to be a strange statement, the quick turnaround only provides evidence that consumers were, in large part, simply utilizing their governmental stimulus gifts for spending. Which is the point of it of course, but that is not going to last for long. So, any excitement should be tempered with a dose of reality.
The general trend for credit is still moving in the wrong direction and it is still providing evidence that the consumer is still struggling to pay for goods. This is clearly shown by the increase of $8.9 billion of consumer credit added in April. The main component of the increase is nonrevolving lines of credit that include durable goods. These are the same durable goods which have been slowing due to lack of consumer demand.
