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Economy in Brief

U.S. Consumer Credit Extension Pulls Back
by Tom Moeller  October 10, 2011

Consumers may have developed some economic uncertainty. Reported late Friday, overall consumer credit outstanding fell $9.5B following a revised $11.9B July rise, initially reported as $15.5B. An $8.0B increase had been expected by Action Economics. It was the first monthly decline in credit since September of last year. Credit has risen 2.1% during the last twelve months following the 1.7% decline during 2010.

Non-revolving credit, which accounts for nearly two-thirds of the total, backpedaled $7.3B and reversed half of the July gain. Nevertheless, the 4.6% y/y change builds on the 1.5% increase last year. Loans by the Federal government rose by more-than one-half y/y but finance company lending fell 4.5% y/y. Commercial bank credit also fell 4.8% y/y but saving institutions lending ticked up 0.5% y/y. Nonfinancial business credit inched up 0.9% y/y but pools of securitized assts fell 20.3% y/y.

Consumers also reduced revolving credit balances during August by $2.2B and it lessened the y/y decline to 2.8%. 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 4.4% y/y. Meanwhile, finance company credit rose 6.3% y/y while savings institution credit jumped 13.0% y/y. Credit union lending rose a stable and slower 2.3% 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.

Consumer Credit Outstanding
(M/M Chg, SAAR)
Aug Jul Jun Y/Y 2010 2009 2008
Total $-9.5B $11.9B $11.3B 2.1% -1.7% -4.4% 1.5%
  Revolving -2.2 -3.6 2.6 -2.8 -7.5 -9.6 1.7
  Non-revolving -7.3 15.5 8.8 4.6 1.5 -1.3 1.5
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