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Economy in Brief

U.S. Consumer Credit Growth Up in November, Trend Down Sharply
by Tom Moeller January 9, 2008

At an annual rate, consumer credit grew 7.7% in November. That was a recovery from the depressed 1.0% gain in October.

In a sign of weaker consumer spending, year to year the 5.2% growth in credit is down slightly from its recent peak of 5.4%. The three month change however is down sharply to 3.7%, half the growth rate of this past August.

The accompanying chart indicates just how sharply the growth in consumer spending has slowed. Sales of general merchandise, appliances and furniture (major items that are financed) declined slightly in the three months ended in October.

Non-revolving credit, which accounts for nearly two thirds of the total, grew a somewhat slower 3.9% in November versus October, but the three month growth rate collapsed to 0.7% from its peak of 6.4% in August.

Revolving credit grew a faster 12.0% in November versus October, but here again the 9.0% three month growth rate is down from the 10.2% rate of growth this past July.

These figures are the major input to the Fed's Flow of Funds accounts for the household sector, released quarterly. For the third quarter, an acceleration in consumer credit growth (as evidenced by the three month peaks noted above) was accompanied by a sharp acceleration in bank loans.

Dollars and Sense is a recent speech by William Poole, President of the Federal Reserve Bank of St. Louis and it is available here.

Consumer Credit (m/m Chg, SAAR) November October Y/Y 2006  2005 2004
Total 7.7%  1.0% 5.2% 4.5% 4.3% 5.5%
  Revolving 12.0 8.9 7.4 6.1 3.1 3.8
  Non-revolving 3.9 4.1 3.9 3.6 4.9 6.4
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