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Economy in Brief

U.S. Consumer Borrowing Increases
by Tom Moeller   June 8, 2011

The improved job market has encouraged more credit usage by consumers. Reported late yesterday, overall consumer credit rose $6.3B during April following a downwardly-revised March gain of $4.8B. A $5.0B increase has been expected by Action Economics. Credit has risen strongly during the last seven months following declines from 2008 and into 2010.

Non-revolving credit, which accounts for nearly two-thirds of the total, rose for the ninth straight month. The $7.2B increase pulled the y/y change to 3.4% following a 1.5% increase last year. Loans by the Federal government rose 69.9% y/y but finance company lending fell 7.5%. Commercial bank credit fell 6.2% y/y while saving institutions lending slipped 0.8%. Nonfinancial business credit also slipped by 0.4% but pools of securitized assts dropped 20.0%.

Consumers resumed paying down their revolving credit outstanding balances. The $1.0B decline lowered them by 4.9% y/y. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 15.2% y/y and commercial bank credit fell 7.1%. Finance company credit rose 5.5% and savings institution credit rose 16.6%. Credit union credit rose 1.4% and nonfinancial business credit remained unchanged.

During the last ten years, there has been a 53% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures, although the correlation recently has weakened considerably. The credit figures are the major input to the Fed's quarterly Flow of Funds accounts for the household sector.

The consumer credit data are available in Haver's USECON database. The Action Economics figures are in the AS1REPNA database.

The U.S. Economic Outlook is the title of yesterday's speech by Fed Chairman Ben S. Bernanke and it can be found here.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Apr Mar Feb Y/Y % 2010 2009 2008
Total $6.3B $4.8B $6.5B 0.6 -1.7% -4.4% 1.5%
  Revolving -1.0 0.1 -4.2 -4.9 -7.5 -9.6 1.7
  Non-revolving 7.2 4.8 10.6 3.4 1.5 -1.3 1.5
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