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Economy in Brief

U.S. Consumer Credit Expands Modestly In April
by Tom Moeller June 8, 2010

The latest consumer credit numbers released late-yesterday indicated that credit rose $1.0B during April. However, the Federal Reserve revised the March figure to a sharp $5.4B decline from a $2.0B increase reported last month. While these m/m figures should initially be interpreted with caution, the trend in credit usage seems to be turning away from the sharp reductions of last year. The y/y change has moderated to -3.2% from -4.4% at its worst last December and the three-month change is -2.0% (AR).  

he most that can be said about the pullback in the usage of revolving credit is that it perhaps is stabilizing. An $8.5B April decline followed a revised $3.7B drop and the three-month change of $-9.4% was reduced from the worst of $-12.9B in January. Pools of securitized assets were virtually unchanged (-88.7% y/y) after a sharp March decline. Finance companies also held lending constant (+28.9% y/y) though commercial bank lending slipped (+79.7% y/y). Loans from credit unions also were constant (+5.5% y/y) while lending by savings institutions slipped (+15.1%).

Usage of non-revolving credit (autos & other consumer durables), which accounts for nearly two-thirds of the total seems firmer. It fell modestly during the recession but has increased this year. Usage rose $9.5B in April after falling $1.7B, but that March decline initially was reported as a $5.2B increase. Federal government & Sallie Mae lending expanded by three-quarters y/y while commercial bank lending rose 6.8% after last year's 1.0% increase. These gains offset a nearly one-half y/y decline in pools of securitized assets, a 16.6% fall in savings institutions, an easier 3.3% decline in finance companies and a 3.2% fall in credit union lending. 

During the last ten years, there has been a 60% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures.  Moreover, 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.

Moving Beyond the Financial Crisis is today's speech by Fed Governor Elizabeth A. Duke and it can be found here here.


Consumer Credit Outstanding (m/m Chg, SAAR) April March February y/y 2009 2008 2007
Total $1.0B $-5.4B $-7.8B -3.2% -4.4% 1.5% 5.7%
Revolving $-8.5B $-3.7B $-8.7B -9.6% -9.6% 1.6% 8.1%
  Non-revolving $9.5B $-1.7B $0.9B 0.5% -1.3% 1.5% 4.4%
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