Consumer Lending

The LIBOR and Fed Funds forecasts have been updated.

The beige book has been released. Highlights:

Consumer spending was reported as sluggish or slowing in nearly all Districts, although tax rebate checks boosted sales for some items. Tourist activity was mixed, with residents in several Districts choosing to vacation closer to home due to high gasoline prices. The demand for services was also mixed across Districts, with strength in the IT and health care industries offsetting some weakness in other service sectors. Manufacturing activity declined in many Districts, although demand for exports remained generally high. Residential real estate markets declined or were still weak across most of the country. Commercial real estate activity also slowed or remained sluggish in a majority of Districts, although a few Districts noted slight improvement. In banking, loan growth was generally reported to be restrained, with residential real estate lending and consumer lending showing more weakness than commercial lending. Districts reporting on agricultural activity said conditions were mixed, based largely on how June precipitation affected them. Districts reporting on the energy sector said it continued to strengthen.

All reporting Districts characterized overall price pressures as elevated or increasing. Input prices continued to rise, particularly for fuel, other petroleum-based materials, metals, food, and chemicals. Retail price inflation varied across the country, with some Districts reporting increases but others noting some stability, at least for the present. Wage pressures were generally limited in most Districts, as labor market demand was soft except for highly skilled workers and in the energy sector.

Beige book

Total consumer credit increased by $7.8 billion in May. Revolving credit was up $5.6 billion, or 7.1%, which compares to a revised decrease of 0.5% in the previous month. Non-revolving credit rose $2.1 billion, or 1.6%.

Consumer credit release

Total consumer credit rose $8.9 billion in April, up an annualized 4.2% from the previous month. Revolving credit was up just $0.3 billion, or 0.4%, while non-revolving credit was up $8.7 billion, or 6.5%.

Consumer credit release

Deteriorating asset quality concentrated in real estate loan portfolios continued to take a toll on the earnings performance of many insured institutions in first quarter 2008. Higher loss provisions were the primary reason that industry earnings for the quarter totaled only $19.3 billion, compared to $35.6 billion a year earlier. FDIC-insured commercial banks and savings institutions set aside $37.1 billion in loan-loss provisions during the quarter, more than four times the $9.2 billion set aside in first quarter 2007. Provisions absorbed 24 percent of the industry’s net operating revenue (net interest income plus total oninterest income) in the quarter, compared to only 6 percent in the first quarter of 2007. The average return on assets (ROA) was 0.59 percent, falling from 1.20 percent in first quarter 2007. The first quarter’s ROA is the second-lowest since fourth quarter 1991.

Full QBP

The analysis on the size of the consumer lending industry has been updated.

Consumer credit rose $15.3 billion in March to $2.56 trillion, an increase of 7.2% (annualized).

Credit cards and other revolving debt rose $6.3 billion, while installment debt rose $9 billion from the prior month.

Consumer credit release

The consumer lending calendar has been updated to show the dates of events and important news releases for the rest of 2008.

The LIBOR and fed funds rate forecasts have been updated.

The Federal Reserve announced today that total consumer credit increased $5.1 billion in February, an annualized rate of 2.4%. Revolving credit (such as credit cards) increased $4.7 billion, or 5.9% (annualized) from January. Non-revolving credit (such as auto loans) increased $0.5 billion, or 0.4% (annualized).

Consumer Credit Release