Recent Updates

  • Markit PMI: Manufacturing Survey - Australia (Sep)
  • Euro area: Flash Consumer Confidence (Oct), ECB Banking Lending Survey (Q4)
  • US: Philadelphia Fed Nonmfg Business Outlook (Oct); Richmond Fed Mfg & Service Sector Surveys (Oct)
  • Spain: Bank Lending Survey (Q4), International Trade Summary, Construction Permits (Aug)
  • Macao: Visitor Arrivals (Sep)
  • Singapore: Housing & Development Board Annual Report (2017)
  • more updates...

Economy in Brief

U.S. Consumer Credit Expands But The Mix Diverges
by Tom Moeller   March 7, 2011

A firmer job market is encouraging consumers to take on more debt, but this time it's not business as usual. During January consumer credit expanded by $5.0B after a revised $4.1B increase during December. Credit has risen strongly during the last four months following declines from 2008 through 2010. The difference this time, however, is that the Federal government is the big player.

Holding of non-revolving credit, which accounts for nearly two-thirds of the total, rose firmly for the fifth straight month. The $9.2B monthly increase turned the y/y change positive by 1.6% following a 1.5% increase last year. The January increase was led by a $26.3B increase in Federal Government debt, up nearly three-quarters y/y. To the downside, pools of securitized credit fell by nearly one-half while commercial bank credit was off 4.0%. Saving institutions credit was off by 3.6%, credit union credit fell 3.8% and finance company borrowing fell 3.1% y/y. Nonfinancial business credit fell a lesser 1.3%.

Recent, moderate gains in consumer spending have not come, however, with a run-up in revolving consumer credit which fell $4.2B during January. Since January 2009 credit has fallen during every month for a total decline of 18.6%. During the last twelve months alone, credit is down 7.2%. Prior to 2009, revolving credit had never been negative y/y. Pools of securitized assets led the decline with an 89.5% y/y drop. To the upside, commercial bank credit rose three quarters y/y, finance company credit rose one-half as did savings institution credit. Credit union credit rose 1.4% and nonfinancial business credit was unchanged.

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. 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.

Improving the International Monetary and Financial System is Friday's speech by Fed Vice-Chair Janet L. Yellen and it can be found here.

Consumer Credit Outstanding
(m/m Chg, SAAR)
Jan Dec Nov Y/Y 2010 2009 2008
Total $5.0B $4.1B $1.3B -1.4% -1.7% -4.4% 1.5%
  Revolving -4.2 2.0 -3.7 -7.2 -7.6 -9.6 1.7
  Non-revolving 9.2 2.1 5.1 1.6 1.5 -1.3 1.5
close
large image