Brian Sozzi Discusses July Consumer Credit

Brian Sozzi of Wall Street Strategies is out with a research report on consumer credit and how it plays into the American economy.

In his note, Sozzi wrote, "The July consumer credit numbers were championed as fairly solid after they were released. However, the largest decline in revolving credit in six months caught my attention for there was an improving trend from April to June of this year. Whether the retrenchment was due to the assorted macro headlines of the month or not the fact is a trend was broken. The reality is that the advance in revolving credit, coupled with a decline in the personal savings rate, supported pops in retail sales in July and likely (numbers are to be released next week; chain-store sales showed upside relative to consensus) August."

Sozzi goes on to question how September and October will look, with these two months being notoriously slow, right before the holiday shopping season. He says that with the rise in revolving credit and the decline in personal savings rate may be temporarily off the table to help retail sales in these months.

The Wall Street Strategies analyst concludes his note by saying, "If a short-term pullback in retail sales were to occur, it would not come as a surprise given recent historical patterns. The consumer is displaying Tom & Jerry behavior, with it being Jerry Mouse and the world being Tom Cat. When the macro coast is clear and savings flush, Jerry, aka the consumer, plays in the malls, discounters, and online stores."