Consumer Credit Report

The Consumer Credit Report (abreviated as CCR in my explaination) is issued by the Federal Reserve Board from places such as banks, finance companies, retails sales outfits and credit unions. The report is a survey which tracks an individuals debt and loans. This does not include real-estate loans, but is limited to revolving* and non-revolving** credit. It is issued about 5 weeks after the end of the month. The CCR details outstanding balances, average intrest rates on consumer loans and also illustrates the areas of highest growth.

The CCR is used to predict upcoming spending levels. Spikes in debt cause panic and lower spending, while dips relax the white-knuckled hands of consumers from their wallets.The CCR is also used to predict recisions, as high debts mean low spending and a slower economy. This isn't proof, but it's a good alert because consumers make up 2/3 of GDP consumption. The CCR is reviewed in the long-term, so that trends can be more easily seen. The CCR is considered a lagging indicator***.

Strengths of the CCR include that it shows what kind of debt that people are in, intrest rates, which leads to how much money that consumers will have to spend. This is a good tool for comparison on a month to month or year to year basis.

Weaknesses of the CCR are that home-equity loans aren't included which leaves a gap in the info. The month-by-month is overstudied when paired with the consumer confidence report. Also, the CCR only shows growth in outstanding debt.

I think that the CCR is probably a good indicator, when used correctly. As long as you take the lag into account and you use the correct month to support what you're looking into the Consumer Credit Report will give you an accurate view of long-term credit trends.


*Revolving Credit is money that can be spent without contacting the creditor up to a limit. (Example: credit cards)
**Non-Revolving Credit is a loan that has all details fixed at the start (Example: car loan)
***Lagging Indicators are reports that take longer to show change than the economy is actually changing.