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Economy in Brief

U.S. Consumer Credit Outstanding Drops; Earlier Declines Shaved
by Tom Moeller December 08, 2009

The Federal Reserve reported yesterday that consumer credit outstanding fell by $3.5B m/m during October. While it was the thirteenth monthly drop since summer 2008, earlier declines were trimmed. And though consumer credit outstanding as a percentage of disposable income has fallen to 22.4% from its 2005 high of 24.7%, these rates are up from the low near 16% in the early-1990s. 

The recent improvement in consumer sentiment may be reducing the aversion to credit. Consumers during October actually raised their level of non-revolving credit for the third month this year. Declines earlier in 2009 were revised sharply shallower and the recent three-month change of +0.5% compares to this year's deepest of -0.8% during April. Usage of non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total, fell $6.9B after an $8.7B September decline that was deeper than reported initially, as were earlier declines. The 8.5% y/y decline was by far a record.

Savings institutions actually raised their level of lending during the last three months (-3.5% y/y).  Commercial bank loans were stable, though still down a sharp 3.6% y/y. Loans from credit unions also increased slightly since the spring (1.9% y/y) and the Federal government & Sallie Mae raised their level of credit outstanding by more than two-thirds y/y.

These figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.

Credit data are available in Haver's USECON database. The Flow of Funds data are in Haver's FFUNDS database.

Rescuing asset-backed securities markets from the Federal Reserve Bank of Chicago can be found here

Consumer Credit Outstanding (m/m Chg, SAAR) October September Y/Y 2008 2007 2006 
Total $-3.5B  $-8.7B -3.6% 1.6% 5.6% 4.1%
  Revolving $-6.9B $-8.0B -8.5% 1.9% 7.8% 5.0%
  Non-revolving $3.5B $-0.9B -0.6% 1.4% 4.4% 3.6%
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