What do credit conditions mean to the economy? A fiat/debt based one.


Extremely strong correlation to this measure which goes back to 1971 - strangely enough.

It is a slightly trailing indicator of a little over a week. 0 is neutral. This score is generally negative except for significant economic concern times.

Still relatively loose credit, not changing much recently. Will post every week, when it comes out.

I have posted this chart and link often ( down the basement) so if you want to review its high correlation to the economy you can view the 50+ year old chart
If it goes positive, it is almost a sure sign of some pain happening, the more positive, the more the pain.

Makes sense logically, if credit is easier, then those granting it are feeling relatively good about the economy. It can change quite quickly though. ( this is my opinion for spring)
( the relatively good part is how negative the score is )

Index Suggests Steady Financial Conditions in Week Ending February 24
The NFCI was unchanged at 0.41 in the week ending February 24. Risk indicators contributed 0.15, credit indicators contributed 0.14, and leverage indicators contributed 0.11 to the index in the latest week.

The ANFCI ticked up in the latest week to 0.41. Risk indicators contributed 0.16, credit indicators contributed 0.09, leverage indicators contributed 0.10, and the adjustments for prevailing macroeconomic conditions contributed 0.04 to the index in the latest week.

The NFCI and ANFCI are each constructed to have an average value of zero and a standard deviation of one over a sample period extending back to 1971. Positive values of the NFCI have been historically associated with tighter-than-average financial conditions, while negative values have been historically associated with looser-than-average financial conditions. Similarly, positive values of the ANFCI have been historically associated with financial conditions that are tighter than what would be typically suggested by prevailing macroeconomic conditions, while negative values have been historically associated with the opposite.