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Economy in Brief

U.S. Consumer Credit Extension Jumps
by Tom Moeller  August 8, 2011

Consumers seem more secure about taking on debt. Reported late Friday, overall consumer credit surged $15.5B during June following an unrevised $5.1B May increase. A $5.1B increase had been expected by Action Economics. Credit has risen during the last nine months at a 2.9% annual rate (1.7% y/y) and has reversed last year's decline.

Non-revolving credit, which accounts for nearly two-thirds of the total, surged. The $10.3B June increase nearly matched the jump during February and pulled the y/y change to 4.3%, its strongest since April, 2008. Loans by the Federal government rose by two-thirds y/y but finance company lending dropped 6.5%. Commercial bank credit also fell 5.1% y/y while saving institutions lending was off 1.3%. Nonfinancial business credit inched up 0.7% but pools of securitized assts fell 17.6%.

Consumers also raised revolving credit balances during June. The $5.2B advance was the second gain since December and lessened the y/y decline to 3.4%. Prior to 2009, revolving credit usage had never been negative y/y. Pools of securitized assets dropped 14.8% y/y and commercial bank credit fell 5.2%. Meanwhile, finance company credit rose 6.4% y/y while savings institution credit jumped 15.5%. Credit union lending rose a diminished 2.6% y/y 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.

Sustainable Social Security: Four Options from the Federal Reserve Bank of New York can be found here.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Jun May Apr Y/Y 2010 2009 2008
Total $15.5B $5.1B $5.6B 1.7% -1.7% -4.4% 1.5%
  Revolving 5.2 3.3 -0.8 -3.4 -7.5 -9.6 1.7
  Non-revolving 10.3 1.7 6.6 4.3 1.5 -1.3 1.5
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