Consumer Credit and Stock Returns

Does expansion (contraction) of consumer credit indicate growing (shrinking) corporate sales, earnings and ultimately stock prices? The Federal Reserve collects and publishes U.S. consumer credit data on a monthly basis with a delay of about five weeks. Using monthly seasonally adjusted total U.S. consumer credit for January 1943 through February 2021 and monthly S&P 500 Index closes for January 1943 through March 2021, we find that: (more…)