Spotting the local story in consumer spending trends

The Federal Reserve will release its monthly report on consumer credit at 3 p.m. this afternoon. The July report – they’re usually released in the first five or six business days of the month – will reflect consumer borrowing activity in May. It’ll be closely watched after the June release showed U.S. consumer borrowing in April dropped by a stunning $15.7 billion. That was the second-largest dive on record following a $16.6 billion drop in March as joblessness and tighter lending standards, among other factors, prompted shoppers to keep their plastic stowed.

Consumer spending drives about 70 percent of the nation’s economy, so such a sharp pullback – while a sign of more prudent individual money management — is dismal news for purveyors of goods and services. The Fed report provides data on revolving debt, such as that charged to credit cards, and non-revolving debt including auto loans. It does not reflect home loans or other consumer debt secured by real estate, so it’s a good barometer of everyday household spending.

You can localize the Fed report by talking with local merchants, restaurateurs, auto dealers and myriad service providers from hair salons to pet groomers. Do they see an actual drop in spending, or are patrons paying more with dollar bills than credit these days?

For more useful statistics about consumer credit use and the credit card industry, be sure to sign up for media access at CardTrak.com. Their data center provides a bonanza of reports showing how consumers use a variety of payment cards, including a state-by-state perspective on average household credit card debt and tables that break out store card and gasoline card usage. CardTrak’s analysts are accessible for interviews about industry trends; the site also features a glossary of payment card terms as well as get-out-of-debt calculators you can use to do the math for readers on hypothetical borrowing scenarios.

Be sure to check with local credit unions that issue payment cards (usually with the Visa or MasterCard logo, meaning that’s the processing system their transactions run through); they’re more likely than the big banks to be candid about trends and card-use activity in your region. Consumer credit counseling centers – be sure to find a not-for-profit one via the National Foundation for Credit Counseling – often will speak to reporters about trends they are seeing in their area.

CreditCards.com is another site that tracks consumer and industry data, and it also features industry analysis and personal finance news, including its Taking Charge blog by a panel of experts.