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Economy in Brief

U.S. Consumer Credit Growth Strengthens
by Tom Moeller   April 8, 2011

During February, consumer credit expanded by $6.7B after a revised $4.5B increase during January, initially reported as $4.0B. Credit has risen strongly during the last five months following declines from 2008 through 2010.

Non-revolving credit, which accounts for nearly two-thirds of the total, rose for the sixth straight month. The $10.3B monthly increase pulled the y/y change to 2.3% following a 1.5% increase last year. Loans by the Federal government rose 70.7% y/y but finance company lending fell 4.1%. Commercial bank credit fell 2.9% y/y and saving institutions credit fell 2.1%. Nonfinancial business credit fell 0.9%.

Consumers continued last month to pay down their revolving credit outstanding. It fell $2.7B during February and was down in most every month since September 2008. Prior to 2009, revolving credit had never been negative y/y. Pools of securitized assets led the decline with an 89.2% y/y drop. To the upside, commercial bank credit rose 80.5 y/y, finance company credit rose more-than one-half and savings institution credit rose one-third. Credit union credit rose 2.6% and nonfinancial business credit remained 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.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Feb Jan Dec Y/Y 2010 2009 2008
Total $7.6B $4.5B $4.7B -0.6% -1.7% -4.4% 1.5%
  Revolving -2.7 -4.0 2.0 -6.2 -7.5 -9.6 1.7
  Non-revolving 10.3 8.3 2.7 2.3 1.5 -1.3 1.5
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