The consumer credit index includes the amount of credit Americans have, the amount they are using and their confidence in their financial situation. The consumer credit index changes daily with the economy and has ups and downs as with any other index.
Significance
The significance of the consumer credit index is that it provides a realistic view of the country's creditworthiness as a whole. For example, the consumer credit index shows how in debt Americans are, how the debt is being paid off, when consumers on average are late in paying their debt and the like. The consumer credit index acts like a microscope on Americans' credit profile.
Considerations
It's important to keep in mind the consumer credit index is based on research and the actual state of credit as a whole when the index is reported. When the index reports Americans are more in debt than ever, it simply means that never at a previous point in history has so much consumer debt existed as a whole, not that every single American is in debt.
Misconceptions
The consumer credit index is simply a measuring tool. It helps economists view the country and its financial status through the view of outstanding credit. Few people realize that by monitoring the credit index it's easier to predict recessions, economic stalls and other problems like slow growth. The consumer index is not about the average American as it is believed. Instead, it's about the average credit status of all American credit accounts.
Benefits
The benefits of the consumer credit index is that the country may be studied on the basis of its credit status and how it corresponds to the economy and the world.
Warning
As the country's credit index falls, this shows that Americans are struggling to keep up with their obligations. It's important to pay attention to the index so the government knows when it needs to intercede.
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