Tuesday, October 13, 2009

Consumer Credit: Supply vs. Demand

In response to my post on Consumer Credit, an anonymous reader asks:

Is it possible to determine whether the decline in consumer credit is due to consumers voluntarily paying down their credit, or to banks providing less of it? Consumers paying down their credit cards seems infinitely less scary than banks refusing to lend.
I can't find data related to actual paydowns (if anyone has it, let me know), but here is some data that shows the measure of supply / demand according to historical senior loan officer surveys (smoothed over 12 months).

It looks like there has been a lack of demand for consumer credit since late 2003, thus the need for easier and wider availability of credit. It has only been since late 2007 / early 2008 that supply has become constrained.

Source: Federal Reserve


  1. Wouldn't the total collapse of the home equity loan market combined with the large number of unemployed or bankrupt enough to explain the change in consumer credit/income?
    Removing those factors, the real question would be, how has consumer behavior really changed?
    The answer to that would more likely be found in Wal*Mart/Costco/Target sales than in looking at broad averages.

  2. are you sure home equity loans are counted within consumer loan space? my guess is they are counted in the mortgage loan bucket that the fed details