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The Consumer Credit Report is a monthly release from the Federal Reserve Board that estimates changes in the dollar amounts of outstanding loans to individuals, funds which are mainly used to purchase consumer goods. Loans backed by real estate, such as home equity lines of credit (HELOCs), are not included in the survey. The two classes of credit covered are revolving and non-revolving credit; revolving credit can be increased by the consumer up to a limit without contacting the creditor (as in credit cards), while non-revolving terms are fixed at the time the loan (as with an auto loan).

Both classes are segmented into the categories below. The Consumer Credit Report shows the outstanding balances for each:


* Commercial banks
* Finance companies
* Credit unions
* Federal government & Sallie Mae
* Savings institutions
* Non-financial businesses
* Securitized asset pools


Average interest rates are shown for many types of consumer debt, such as auto loans, credit cards and bank loans, collectively showing investors the overall "credit quality" of consumers and where the highest rates of growth are occurring.

Data is collected through surveys of banks, finance companies, retail sales outfits and credit unions, among others. Each release will show the three previous months' results, including any revisions to recent periods, if they have occurred. (For related reading, see Consumer Credit Report: What's On It.)

What it Means for Investors
Consumer credit is considered a good indicator of the potential future spending levels seen in the Personal Consumption and Retail Sales reports, and shows the extent to which benchmark interest rates such as the fed funds rate and prime rate have manifested themselves at the consumer level (it can take six months to a year for macro interest rates to work their way down to consumers).

The headline stats of this release will be total consumer debt (expressed in trillions and seasonally adjusted), the current annual run rate of growth or decline, and the total percentage of credit card delinquencies. The delinquencies are studied because sudden spikes may lead to fears that consumers are overextended in their debt levels. Some economists will try to compare the default percentages seen in the most recent recession as a breakpoint - if current default levels approach it, they will look for a recessionary trend to show itself in other economic indicators.

These factors are important when investors consider that consumers make up more than two-thirds of total GDP consumption. If consumers stop spending or face a credit crunch, GDP will not be able to grow much. Investors in consumer cyclical stocks should be keenly interested in consumers' ability to spend more in the future.