Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update highlights consumer credit and the President's jobs plan.

• Late yesterday afternoon, the Federal Reserve released data on consumer credit which showed that consumers were able to borrow an additional $12 billion in July—the biggest jump since April 2008.  Most of the credit extension was in non-revolving credit such as student and car loans.  Revolving credit, typically credit cards, actually saw a slight decline in July.  Real estate loans are excluded from consumer credit.
• The increase in credit extension would typically be good news, suggesting that consumers are more confident in the present state and the future and banks and other finance institutions are more willing to lend.  Digging a little deeper, however, shows the economy’s reliance on government credit.  Government credit grew by more than the net credit extension in the most recent month and in the most recent 12 months as well.
• Yesterday evening, the President revealed his jobs plan which includes about $450 billion in tax cuts and other jobs-creating measures.  These measures amount to 3 percent of total GDP, so the plan would be a substantial boost to the economy.  However, two factors could diminish this boost.
• First, if the plan is enacted without being paid for, it could lead to additional deficits and debt which could hamper growth as consumers and businesses are anxious about the government’s fiscal stability.  Also, it could lead to crowding out in the long-run as government activity drives up rates and costs and private businesses, unable to compete, drop out of the market.
• Second, if the plan is enacted and paid for, any “pay-fors” Congress finds will reduce government spending in the short-run which by definition reduces gross domestic product.  In this case, the plan will have an offset that diminishes the total effect.

Weekly Forecast

At a glance, this table shows the forecast for some of the most pertinent weekly data for REALTORS® to keep in mind. This changes from week to week as new data becomes available. For the full forecast from the latest Pending Home Sales release, click here (PDF).